SAMPO INSURANCE COMPANY LIMITED

Annual General Meeting

The Annual General Meeting of Sampo Insurance Company Limited Sampo, the leading non-life insurance group in Finland, is made up of will he held at the Company's Head Office in Turku, at Puutarhakatu 1, on Wednesday, April 26, 1995 non-life insurance companies specialised in client segments. Their services are completed at 1 p.m. by the life and pension insurance companies that belong to the Sampo Group. Reports for the Year 1994 The Sampo Group is a full service insurer that offers its clients high quality insurance products Sampo Insurance Company Limited Contains summaries of the Non-Life Group companies, and risk management expertise. Sampo wishes to offer its shareholders a competitive total return of Kaleva Mutual Insurance Company and Sampo Pension Insurance Company Limited - available in Finnish, Swedish and English by means of a profitable insurance business and the well managed investments that support it.

Insurance Company of Finland Limited Sampo's success is built on the commitment of personnel to our mutual values: - available in Finnish, Swedish and English the continuous development of professional competence, enterprise and innovation. ST International Insurance Company Limited - available in English

Patria Reinsurance Company Limited - available in English

Kaleva Mutual Insurance Company - available in Finnish and Swedish

Insurance Company Sampo Pension Limited - available in Finnish and Swedish

Interim Report for 1995

During the year 1995, Sampo will publish one interim report for the period January 1 to June 30, 1995. The report will be published on Thursday, August 31, 1995. - available in Finnish, Swedish and English CONTENTS KEY INFORMATION ON THE SAMPO NON-LIFE GROUP

1990 1991 1992 1993 1994 Change %

SAMPO INSURANCE COMPANY LIMITED Turnover FIM mill. 3321 3472 3116 5 508 5 570 1.1 Premiums Written FIM mill. Key Information on the Sampo Non-Life Group 3 2 578 2 657 2 314 3695 3 986 7.9 Chief Executive Officer's Review 4 Net Investment Income FIM mill. 497 346 571 1182 740 -37.4 Shares and Shareholders 6 Claims Incurred FIM mill. 2 461 2 709 2 575 3611 Composition of the Sampo Non-Life Group 8 3 223 -10.7 Operating Expenses FIM mill. 605 596 543 669 884 + 32.1 Unequalised Result FIM mill. -72 -257 -271 427 344 -19.4 Total on Balance Sheet ACCOUNTS FOR THE YEAR FIM mill. 7996 8349 8 667 14858 16 234 9-3 No. of Personnel Report by the Board of Directors 10 2 365 2 351 2 225 2 642 2 966 12.3 Consolidated Profit and Loss Account 18 Solvency Ratio % 157 135 139 206 212 Consolidated Balance Sheet 20 2.9 Earnings per Share FIM 0.09 -29.58 25.52 Parent Company Profit and Loss Account 22 -8.75 9.24 -63.8 Net Asset Value per Share FIM Parent Company Balance Sheet 24 349 313 285 393 410 4.3 Adjusted Closing Share Price Consolidated Statement of Changes in Financial Position 26 FIM 370 152 110 294 215 -26.9 Parent Company Statement of Changes in Financial Position 26 Appendices 27 The exchange rate of 1 FIM (Finnish markka) is USD 4.7432. Methods of Calculation for the Key Figures 29 Analyses 33 Auditors' Report 47 Statement by the Supervisory Board 48

Sampo Non-Life Group Main Organisation

Non-Life Group: Direct Underwriting Result by Class 1990 - 1994 49 Group Management IAS Accounts Statement 50 Special Features Concerning the Accounts of Insurance Companies 51 CEO Supervisory Board 52 Staff Units: Group Finance, Group Planning, Information, Legal Affairs Board of Directors and Auditors 53 Business Units

SAMPO NON-LIFE GROUP PRIVATE SAMPO SAMPO ENTERPRISE Private Sampo and Kansa General 54 KANSA GENERAL INDUSTRIAL INSURANCE 1 Industrial Insurance 56 Sampo Enterprise 58 Otso 60 Insurance Company of Finland 61 INSURANCE COMPANY 1 OTSO ST International and Patria 62 OF FINLAND RUN-OFF

THE SAMPO GROUP Composition of the Sampo Group 66 INTERNATIONAL Kaleva 68 INVESTMENTS 1 RISK MANAGEMENT OPERATIONS Sampo Pension 70 Management of the Sampo Group 72 Key Information on the Sampo Group 74 Group Services Offices 75 Personnel, Finance, Information Technology, Office Services

2 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 CHIEF EXECUTIVE OFFICER'S REVIEW

ike a number of other countries, Finland has for life insurance savings, since the new bank has Sampo Share Turnover Pick-up started to break free of the prolonged cycle its own life insurance company. Hirnover in Sampo shares on the Helsinki Stock Lof global recession, ending the year under Exchange picked up markedly in the review year, review with a buoyant export sector and a four per High Level of Solvency when 19 per cent of all shares changed hands. cent growth in GNP. Yet high unemployment and Like many other Finnish insurance companies, Sampo "A" Shares rose to rank among those most the structural nature of the national debt have cast Sampo has traditionally maintained a high sol- frequently traded on the Helsinki Stock Exchange, a shadow over the country's potential for economic vency level. Group solvency capital currently stands and were quoted for the first time on the London recovery. The duality that has plagued the Finn- at FIM 7.4 billion, and Sampo's solvency ratio is SEAQ. There are in all more than 420 000 Sampo ish economy in recent years has not been shaken 212 per cent - a figure many times higher than shareholders. Their number remains large thanks off to the extent that might have been hoped, and the level considered good in European terms. Fur- to the change in corporate form and to the merger, the domestic market is consequently taking longer thermore, trends emerging in the year under re- through which no fewer than 800 000 Finnish peo- to recover. view show that a high level of solvency - especially ple received gratuitous Sampo shares. There has to be a gradual reduction in pub- in the prevailing operational climate - gives a dis- Four successful share exchange campaigns lic expenditure to the sort of level which can be tinct competitive edge to life and non-life insur- aimed at passive minor shareholders have attracted prudently covered by taxes and charges. And the ance companies in particular. a sizeable degree of interest. And since the price longer structural reforms in public spending are The importance of solvency became more paid for each share exceeded the Stock Exchange deferred, the more difficult the inevitable task of widely apparent to clients when two small Finnish quotation, Sampo has reacted positively to these restructuring the public sector economy will be- life insurance companies went into liquidation. It campaigns. This is fully in accordance with Sampo come. The Finnish national economy cannot ex- was partly due to this that the Sampo Group's life policy. We want our clients to profit from their pect to make a permanent recovery until and un- insurance company, Kaleva, strengthened its mar- shares, which they own on the basis of their cus- less it is placed on a sound footing. ket position to such a considerable extent. The com- tom with us. Moreover, the cost of normal share There is a direct analogy with insurance here. pany's premiums written rose by more than 80 per trading, especially of small batches of shares, has It is an accepted fact that insurance operations gen- cent. Incidentally, Kaleva, which celebrated its gone up in recent years. As a result of that trend, erally lag behind economic trends. That is the rea- 120th anniversary last year, is the oldest life insur- calls have been made for new modes of share-deal- son why, despite the welcome economic upturn, ance company in Finland. ing operations premiums written on direct insurance by non-life Company solvency should be cherished and companies went down by a further two per cent maintained, not squandered on short-sighted com- Work Continues during the year under review. petition. The deregulation of statutory non-life in- Faced over the past two years with many changes, But the private sector is in the process of re- surance has created a situation where insurers may while the Group underwent such rapid restructur- structuring. Indeed, it has already accomplished, be tempted to price below risk and operating ex- ing through mergers and acquisitions, Sampo per- at least in part, some of the changes needed to meet pense levels. This, if it happened, would benefit sonnel have had to work under considerable pres- the demands of competition that come with mem- nothing and no-one - least of all the healthy long- sure. The outlook on the foreign reinsurance front bership of the European Union. Integration com- term development of the insurance industry. None- to the reduction in value re-adjustments. During Corporation, and operations, for the most part, were I should like to express my most sincere improved considerably. Claims incurred in foreign pels companies to boost their efficiency, even if their theless, the danger is especially pertinent in regard 1993, when the legal amendment came into ef- performed jointly with other Kansa companies thanks to our staff for all their efforts. It has been a reinsurance decreased, and so (by some margin) markets are mainly domestic. to those non-life insurance companies which are fect, revaluations on investment shares, previously which were not involved in the Sampo-Kansa trans- period when their normal working environment did the technical provisions of the two run-off com- action. Sampo predicted this trend some time ago, less successful in the market, and whose solvency recorded as value adjustments on investments, were was sometimes considerably disrupted by opera- panies. This positive development trend for both and carried out its own structural reforms in the is somewhat questionable. In fact, incorrect pric- entered to a total of over FIM 0.5 billion. The cor- The division and allocation of functions were tional events. It is, then, greatly to their credit that run-off companies was clearly attributable not only non-life companies before Finland joined the Eu- ing has already contributed to the closure of one responding sum for 1994 was only FIM 52 million. carried out during the Summer, and Kansa Gen- all personnel have successfully internalised those to the strengthening of the Finnish markka, but ropean Union. As a direct result of these far-sighted Finnish life insurance company. The duality which is still troubling the na- eral then moved its head office and branch offices qualities which will be vital for our future devel- also to Sampo's strategy of cutting out risks in the mergers and acquisitions, Sampo's market share tional economy was in turn reflected in the accrued to Sampo premises. One result of these structural opment - expertise, a spirit of entrepreneurship and international reinsurance business. rose from 20 per cent to 35 per cent in a little over Profitable Insurance Operations premiums written on direct insurance. Non-Life changes has been a cutback in the combined innovation. branch network of both companies from 130 to 85 a year. Net underwriting results in the Sampo Non-Life Group companies dealing mainly in export com- I also wish to extend my warmest thanks to Branch Reorganisation branches. However, this was achieved without in The banking world has undergone a process Group improved in the year under review by al- pany insurance continued to enjoy greater success our shareholders and clients, a considerable Sampo played a full part in the restructuring of any sense compromising service standards. To the of structural change, too. Their realignment cul- most FIM 700 million over 1993- This made it by volume than those Group companies specialis- number of whom have joined the Sampo Group the Finnish insurance market which took place in contrary, Kansa General's customers now have ac- minated in the decision to merge Finland's two possible to increase the equalisation provision by ing in the domestic market. The rapid fall in the during the last two years. We shall do our utmost the year under review. cess to a considerably expanded service network. largest commercial banks, the Union Bank of Fin- FIM 74 million. In contrast, it had been necessary motor TPL rate was responsible for the reduction to ensure that our services and expertise attain the land (SYP) and Kansallis-Osake-Pankki (KOP). during the previous year to reduce the equalisa- in private household sector premiums written. Rate Vahinkovakuutusosakeyhtiö Kansa became From a functional standpoint, it was also es- same high level as our solvency. Co-operation between Sampo and both of these tion provision by FIM 95 million. adjustments, and the increasingly active role of a wholly-owned subsidiary of Sampo in April, 1994. sential for Kansa General to transfer operations to banks has been exemplary. The merger, therefore, The operating profit of the Sampo Non-Life society in transport and industry, also affected the Detaching Kansa General from the Kansa compa- the Flexi offices of the Sampo branches before the In March, 1995 should not alter our operational prospects in the Group stood at FIM 301 million - FIM 19 million claims ratio which, In domestic direct insurance, nies' holding company organisation proved to be other Kansa companies went into liquidation. This banking sector. However, the creation of one ma- below the previous year's figures. This slight de- was 79.9 per cent. All the same, that figure was fewer a demanding task. The difficulty was that the ma- process perplexed insurance clients, and perma- jor bank could lead to more intensive competition crease in operating profit can be attributed mainly than five percentage points up on the previous year. jority of the personnel were employed by the Kansa nently damaged Kansa's reputation. Jouko K. Leskinen

4 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 SHARES AND SHAREHOLDERS

Sampo A Shares are quoted on the Helsinki Stock Shares and Votes Share Capital Increase Executive Shareholdings Shareholders by number of shares owned, March 1, 1995 Exchange and on the SEAQ, a computer based trad- Sampo's share capital stands at FIM 310 000 000, On May 15,1994 the Annual General Meeting ap- Shareholdings by Members and Deputy Members Shareholding No. of shareholders ing system that operates in connection with the and the par value of a share is FIM 20. There have proved the Board's proposal to increase the share of the Supervisory Board, of the Board of Directors, Total no. of shares % of share capital I-ondon Stock Exchange. Quotation on the SEAQ been 300 000 shares cancelled without a reduction capital by FIM 30 000 000, from FIM 280 000 000 and by the Managing Director and the Deputy Man- 1 - 2 151407 286350 began in April 1994. of capital, so that there were 15 200 000 shares on to FIM 310 000 000, by an issue directed at aging Director amounted on December 31, 1994 1.9 3 - 5 105821 396613 2.6 After the first four months of 1994, the price the market at the end of the year. The Board of Di- Kansallis-Osake-Pankki, which would subscribe for to a total of 275 shares, which represent 0.0018 per 6 - 30 154 031 1682 816 of Sampo Shares experienced a downward trend. rectors has not yet made a decision on the transfer 1 500 000 new A Shares with a par value of FIM 20 cent of the total number of votes. 11.1 31 - 100 429024 The highest share price of the year was FIM 238 on of Sampo shares to the computerised securities at a price of FIM 380 per share. The share capital 8991 2.8 101 - 1000 2 221 the Helsinki Stock Exchange, and the lowest FIM system. increase was entered into the trade register on June The Board's Issue Authority 596467 3.9 1001 - 10 000 426 1 201 937 203. The average share price in 1994 was FIM 283, Sampo's shares have been divided into A 30, 1994. The issue was used to cover FIM 570 The Annual General Meeting authorised the Board 7.9 10 001 - 100 000 and the closing share price on Dec. 31 was FIM Shares and B Shares. Of these shares, 15 140 000 million of the total acquisition price of Vahinko- of Directors to decide between June 30,1994 and 63 1924311 12.7 100 001 or more 18 8 682 482 215. The annual relative trading volume amounted are A Shares and 60 000 B Shares. The two shares vakuutusosakeyhtiö Kansa, which stood at FIM 600 May 17,1995 on an increase in the share capital 57.1 Total to 2 816 661 shares, or FIM 797 million. In addi- only differ in the number of votes the holder is en- million. through an issue of shares. The authorisation in- 422 978 15 200 000 100.0 tion, 332 524 Sampo shares were exchanged on titled to at the Annual General Meeting. Each A cludes disapplication of the shareholders' pre- emptive rights. The share capital increase may cor- the SEAQ. Because of the way the system operates, Share entitles the holder to one vote, and each B Agreements Concerning Sampo Shares Major shareholders as recorded in the share register on some of the shares exchanged on the SEAQ are Share to five votes. In accordance with the Insur- According to the agreement signed between Unsa respond to the maximum of a fifth of the compa- March 1,1995 booked twice. ance Companies Act, no one may for himself or as Ltd and the Kaleva Mutual Insurance Company, ny's share capital registered at the time of the au- thorisation by the shareholders' meeting and the A and B shares Number of shares % of share capital % of votes Sampo's solvency capital stood at FIM 7.4 bil- authorised by another, vote more than one tenth Kaleva or a party assigned by Kaleva has pre- Board's decision on a share capital increase. The lion at year end. The market value of the total share (1/10) of the total number of votes represented at emption over Sampo Shares held by Unsa Ltd at Unsa Ltd 2 125623 14.0 13.8 maximum resultant increase in share capital is portfolio amounted to FIM 3.3 billion, and the cor- the meeting. the current price, if Unsa Ltd intends to surrender Kansallis-Osake-Pankki 1 500 000 FIM 56000 000. 9-9 9.7 responding net asset value per share was FIM 410. them. Union Bank of Finland Ltd 957 519 6.3 6.2 The Board proposes that the Annual General Kaleva Mutual Insurance Company 769399 " 5.1 6.5 Meeting grant the Board an authorisation of one Increases in the share capital in 1988-1994 Insurance Company Sampo Pension Ltd 577 149 3.8 3.7 year as of April 26,1995, to pass a resolution on Oy Silja Line Ab 362 606 2) 2.4 2.3 raising the share capital by a rights issue in one or Mode Subscription Terras of subscription Price/ No. of new Share capital Unitas Ltd 344 594 2.3 2.2 period or subscriber share (FIM) shares after the Issue more installments, so that the increase may be FIM Enso-Gutzeit Oy 301334 2.0 2.0 60 million at maximum. The Board would decide Pension-Varma Mutual Insurance Company 280957 1.8 1.8 New issue April 11 to May 20, 1:1 250 3000000 126 million the subscription price of the new shares as well as Kymmene Oy 223606 1.5 1.5 1988 plus subscription right 280 the other terms of subscription. It could also waive Nova Life Insurance Company Limited 206 102 1.4 1.3 2:1 325 3 000 000 186 million shareholders' subscription priority if, from the com- Sampo Finance Ltd 205075 1.4 New issue OctobeNovember 1r7 t18,198o 8 plus subscription right 400 pany's standpoint, good reason for such an action 1.3 A. Ahlström Oy 181272 1.2 1.2 December 12,1993 Owners of Industrial Mutual 4 700 000 280 million existed, such as the financing of an acquisition, Outokumpu Oy 175784 1.2 1.1 Merger compensation Insurance Company an affiliation agreement, or other precautionary Asko Oy 152 803 1.0 1.0 June 30,1994 Kansallis-Osake-Pankki 380 1 500 000 310 million measure to ensure the company's operation pre- Oy Nokia Ab 111133 Directed issue requisites. The Board could also pass a resolution 0.7 0.7 Neste Oy 106515 on increasing the share capital against property 0.7 0.7 Veitsiluoto Oy 101011 Net asset value per share and Stock Exchange trading volume of Shareholder groups given as subscription in kind. 0.7 0.7 stock exchange quotation, FIM Sampo shares per month 1994 Oy Tampella Ab 97 680 0.6 0.6 600 000 Myllykoski Oy 83 645 0.6 0.5 7 Earnings per Share and 500 000 Proposed Dividend 11709 399 registered A Shanes and 60 000 registered B Shares. The Group's Earnings per Share index decreased 21 Oy Silja Line Ab have reported that they have sold nearly all these shares. 400 000 from the previous year, standing at FIM 9.24. How- ever, the Net Asset Value per Share index that indi- 300 000 cates solvency increased by about FIM 17, amount- ing to FIM 409.98 at the end of the accounting pe- The net taxable income per share for shareholders 200 000 provided that the Annual General Meeting accepts riod. entitled to the refund is thus FIM 5.33. the Board's proposal on the dividend. 100 000 l. Banks 19.1 % The Sampo Board of Directors has proposed The shares issued in the issue directed at The dividend is drawable as of April 27,1995 2. Foundations 0.7% that a dividend of 20 per cent of the share nominal Kansallis-Osake-Pankki also entitle the holders to against dividend coupon no. 7 at all offices of 12.7% 3. Insurance companies value be paid for the accounting period, or FIM 4 a full dividend for 1994. Dividend for 1994 is thus 4. Registered associations 0.3% Osuuspankkien Keskusosakepankki Oy, Osuus- 1990 1991 1992 1993 1994 1 2 3 4 5 6 7 B 9101112 5. Companies 48.5% per share. An avoir fiscal tax credit of FIM 1.33 per payable on the total number of shares, that is pankki, Postipankki, and at all post offices. M Net asset value/share * 6. Private persons 16.7% share is payable for the FIM 4 proposed dividend. Closing share price 15 200 000, to the total amount of FIM 60 800 000, 7. Others 2.0% 'at the end of the period

5 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 COMPOSITION OF ACCOUNTS FOR THE YEAR THE SAMPO NON-LIFE GROUP CONTENTS

100% 100% Report by the Board of Directors 10

TEVA HOLDING B.V. Consolidated Profit and Loss Account 18 Consolidated Balance Sheet 20 Parent Company Profit and Loss Account 22 Parent Company Balance Sheet 24 Consolidated Statement of Changes in Financial Position 26 Parent Company Statement of Changes in Financial Position 26

Appendices 27 Accounting Principles 27 Methods of Calculation for the Key Figures 29 Sampo Non-Life Group Key Figures 31 SAMPO Sampo Insurance Company Limited Key Figures 32

Analyses 33 Premiums Written 33 Investments 34 Claims Paid 35 Salaries, Commissions and Personnel 35 Result of Sampo's Insurance Business Retained 36 Depreciation According to Plan 36 Other Income 37 Other Expenses 37 Amounts Due to or from Subsidiaries 38 Loans 38 Valuation of Bonds 38 Shareholdings in Other Companies 39 Non-Life Group's Fixed Assets Shareholdings in Subsidiaries and Related Holdings 4l INSURANCE COMPANY Parent Company's Fixed Assets Shareholdings in OF FINLAND Subsidiaries and Related Holdings 42 Associated Companies 44 100% 100% Taxable Value of Land and Buildings, Stocks and Shares 44 Contingent Liabilities and Pledged Assets 45 SAMPO Revaluation and Revaluation Reserve 45 RISK MANAGEMENT 2 SEETHING LANE Distribution of Shares 45 Statement of Changes in Capital and Reserves 46

11,11 % 63,17% Auditors' Report 47 Statement by the Supervisory Board 48 SAMPO HOLDINGS (UK)

The Non-Life Group also contains 58 independent housing and real estate companies.

SAMPO ANNUAL REPORT 1994 9 22 SAMPO ANNUAL REPORT 1994 SAMPO INSURANCE COMPANY LIMITED ANNUAL REPORT

In 1994, the Sampo Non-Life the previous year. The com - Corporate reorganisation Non-Life Group Performance Non-Life Group: Results In 1994, the Sampo Non-Life Group's adjusted op- Group's adjusted operating bined ratio fell by 15 percent- within the Sampo Non-Life FIM mill. erating margin before depreciation exceeded that Accounts 1994 Accounts 1993 margin before depreciation age points to 109.1 per cent. Group will continue in 1995, of 1993 and stood at FIM 514 million. The under- Net underwriting result exceeded that of the previous with Vah inkovaku u tusosake- writing result improved by almost FIM 700 mil- 587.6 -98.9 year and stood at FIM 514 The Sampo Non-Life Group's yhtio Kansa being merged lion, but the result on investments weakened in Adjusted net investment income 791.0 1 227.8 million. The underwriting solvency was further consoli- with Sampo Insurance Com- comparison to the previous year, when investment Realised gains and losses on investments 842.6 256.5 dated - solvency capital pany Limited. Cost-effec- income was exceptionally high due to amendments Value adjustments and value re-adjustments on investments -315.3 173.2 result improved by almost in Finnish tax legislation. The equalisation provi- Other investment income and expenses FIM 700 million, but the result increasing to almost FIM 7.4 tiveness is sought through the 263.7 798.1 sion affecting the Non-Life Group's result accrued Operating expenses -883.6 -668.9 on investments deteriorated by billion at a solvency ratio of integration of operations and by FIM 74 million, whereas it was reduced by FIM Other ordinary income and expenses 19.2 18.0 FIM 442 million compared to 212 per cent. production systems. 95 million in the previous year. The Group's oper- ating profit totalled FIM 301 million, and the re- Adjusted operating margin before depreciation 514.2 478.0 sult before appropriations and taxes stood at FIM Depreciation according to plan -212.8 -157.3 183 million. Earnings per share were FIM 9.24. Subsequent to the merger of Sampo Insur- Operating Profit 301.4 320.7 ance Company Limited and the Industrial Mutual Change in equalisation provision -73.8 95.1 Insurance Company in 1993, the business was di- Revaluation of investments _ 17.6 vided through demerger between the parent com- Interest and expenses on long-term liabilities -51.2 -63.2 pany Sampo and two subsidiaries, Industrial In- surance and Sampo Enterprise. In 1994, the result Result before extraordinary items 176.5 370.2 of the parent company Sampo before appropria- Extraordinary income and expenses 6.3 -1.1 tions and taxes amounted to FIM 97 million. The Group's planned depreciation totalled Result before appropriations and taxes 182.7 369.1 FIM 213 million, which included a depreciation on goodwill in the amount of FIM 36 million, re-

sulting from the acquisition of Kansa General. Earnings per share and Other income included extraordinary items adjusted dividend per share, FIM amounting to FIM 6 million, and other expenses 30 amounting to FIM 0.5 million. The Group's taxes for the year amounted to FIM 63 million. The avoir fiscal tax credits on the dividends obtained by Sampo from its subsidiaries have been eliminated in the Consolidated Profit and Loss Account by en- tering them as deductions on direct taxes for the year. The Group companies paid a total of FIM 9 million in real estate tax, the parent company's share being FIM 3 million. Real estate tax is in- cluded in investment expenses in the year's ac- counts. 1990 1991 1992 1993 1994 •• Earnings/shore Adjusted dividend/shore mm Board's proposal Board of Directors of the Sampo Non-Life Group. From the left: Vesa Vainio, Georg Ehrnrooth, Thor Björn Lundqvist, Ari Heiniö, Kari 0. Sohlberg, Jouko K. Leskinen and Jukka Härmälä.

10 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 Non-Life Group: Investment Income and Expenses Non-Life Group: Solvency Investments Solvency capital, FIM mill. In 1994, the Sampo Non-Life Group's net invest- FIM mill. Accounts 1994 * Accounts 1993 FIM mill. Accounts 1994 Accounts 1993 ment income amounted to FIM 740 million. In the previous year, the sum was FIM 1182 million and - 8000 Income from interests Capital and reserves 3 133.5 2 505.3 353.1 633.4 had included exceptionally high value re-adjust- Income from dividends 7000 Minority interest 24.4 23.6 73.9 36.9 ments totalling FIM 540 million. These resulted Income from land and buildings 227.5 230.0 6000 Untaxed reserves incl. other than accumulated from the amendment of the Taxation of Businesses - Other direct income depreciation difference from land and buildings 79.5 69.3 28.1 38.8 Act. In 1994, value re-adjustments amounted to 5000 - Equalisation provision 1 111.1 998.2 Direct income 682.6 939.2 FIM 52 million. 4000 - Unrealised gains on investments 3 018.7 2 813.8 The result of investments was markedly im- Realised gains on investments 853.3 263.9 • 3000 Solvency capital 7 367.2 6410.2 proved by realised gains on investments amount- Revaluation - | 17.6 ing to FIM 853 million, the major part of them — 2000 Value re-adjustments • • 52.0 539-9 from shares. Trading in shares was active and, to-

- 1000 Exchange profits 30.6 113.8 Non-Life Group Solvency 1004 million and the claims ratio for direct insur- gether with favourable exchange rate trends, re- Extraordinary income 935.9 935.2 n The Sampo Non-Life Group's solvency continued ance was 78.2 per cent. sulted in the Group's revaluation items increasing 1990 1991 1992 1993 1994 Gross income 1 618.4 1874.4 to over FIM 3 billion, in spite of the high realised tm Unrealised gains on investments to improve, with solvency capital increasing to al- gains on investments. The current value of the H Untaxed reserves etc. most FIM 7.4 billion, and the solvency ratio stand- Reinsurance Equalisation provision ing at 212 per cent. Net asset value per share was The Non-Life Group's premiums written on Interest expenses 182.4 111.6 Group's stock portfolio was FIM 5 905 million, and Capital and reserves FIM 410. reinsurance totalled FIM 620 million. Premiums Expenses for land and buildings 133.5 114.0 its proportion of the entire investment portfolio was written on reinsurance accrued from domestic busi- Other direct expenses 44.8 25.6 39 per cent. Direct Insurance ness, to a limited degree from foreign optional Direct expenses 360.7 251.2 The fall in interest rates reduced direct in- The Sampo Non-Life Group's premiums written property insurance, life reinsurance and recipro- come, which stood at FIM 683 million. The fall in Domestic direct insurance cal business. Foreign insurance amounted to FIM Realised losses on investments 10.7 7.4 direct income was also due to the low demand for non-life market shares 1994* amounted to almost FIM 4 billion, of which direct 564 million, of which the premiums written on the Value adjustments client credit. However, the share of interest-bearing (excl. banks' and Garantia's credit insurance) insurance accounted for FIM 3 367 million. The 367.3 366.7 most important class of insurance was fire and foreign insurances of Finnish companies Exchange losses 140.0 66.9 instruments of the total investment portfolio re- property insurance together with combined insur- amounted to FIM 157 million, showing an increase Extraordinary expenses 518.0 441.0 mained almost unchanged, because investments ance, with premiums written standing at FIM 892 of 31 per cent. A change in the accounting prac- in bonds were increased. Money market invest- Expenses 878.7 692.2 million. Premiums written on workers' compen- tice of life reinsurance increased the premiums ments, bonds and debentures and loans account sation insurance amounted to almost FIM 740 written by FIM 142 million. Net investment income 739.8 1182.2 for 33 per cent of the investment portfolio. million. Premiums written on motor TPL insur- The Non-Life Group's reinsurance companies Bonds and debentures were entered at acqui- ance diminished, mainly due to the fall in pre- * Adjustments relating to differences in exchange rales included as follows: Income from interests, FIM -70.7 million; Interest expenses, sition price, as permitted in the instructions issued ST International Insurance Company Limited, FIM 99 8 million; Realised gains and losses on investments, and value adjustments, FIM -53.0 million. mium rates, and stood at FIM 463 million. Accord- Patria Reinsurance Company Limited and by the Ministry of Social Affairs and Health. Ex- 2 ing to advance information, the Group's market Lakewood Insurance Company Ltd (formerly change rate losses totalling FIM 125 million were K Sampo 34.9% share of domestic direct insurance increased to 35 Sampo U.K.) continued the run-off operations re- Non-Life Group: Investment Portfolio entered on bonds and debentures in foreign cur- 2. Pohjola 26.8 % per cent as a result of the purchase of Vahinko- lating to the reinsurance portfolio. The procedure rencies, thus affecting the result. These, as well as 3. Tapiola 13.4% vakuutusosakeyhtiö Kansa. chosen for discontinuing liabilities has proved suc- ^MjniU. Accounts 1994 Accounts 1993 the exchange rate differences in money market 4. Enterprise Fennia 8.3% instruments, were entered as adjustments to in- 5. Local insurers 6.8% Uncollectable premiums continued to dimin- cessful. The technical provisions decreased by FIM 6. Other 9.8% ish and stood at FIM 35 million. 600 million compared with the previous year, and Investment portfolio come from interest. The negative interest income Total FIM 10.4 billion The value of claims paid by the Group totalled stood at FIM 2.1 billion. The Group managed to Loans 1069.O 1291.0 items, resulting from the entry of exchange rate * Projection FIM 3 617 million. In particular, there were excep- terminate reinsurance contracts in the amount of Bonds and debentures 2 598.5 1 649.0 differences, were entered under interest expenses tionally few major fires to be compensated during FIM 178 million. The strengthening of the Finn- Money market investments 1 442.0 1 841.2 on investments. The exchange rate differences of the year under review. The Group's net claims ra- ish markka reduced the technical provisions by FIM Stocks and shares 3 661.4 2 947.9 shares in foreign currencies were also entered as tio was 83.7 per cent. The combined ratio fell by 330 million. Sampo and Industrial Insurance are Realestateinvestments 3338.9 3469.6 adjustments to the income and expenses relating 15 per cent to stand at 109.1 per cent. responsible for a part of the reinsurance cover Total book value I2I09.8 11198.7 to them. The parent company Sampo's total premiums granted by ST International and Patria. Investments in shares and funds were made written amounted to FIM 1 044 million, of which The Group's total claims paid for reinsurance Valuation difference to an increasing degree on the international mar- FIM 1021 million came from direct insurance. The amounted to FIM 894 million, of which foreign Bonds and debentures -59.0 102.9 ket. At the end of 1994, these investments stood at claims paid by the parent company totalled FIM business accounted for FIM 782 million. Stocks and shares 2 243.7 1 881.4 FIM 221 million. __ReaUstate investments 834.0 829.5 Total valuation difference 3 018.7 2 813.8

8 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 Non-Life group: Land and buildings portfolio 1994 Operating Expenses and Personnel executives and Board members accounted for FIM The Non-Life Group employed an average of 2 966 Personnel by years of service Dec. 1994 Personnel by education Dec. 1994 8463679.37. FlMmill. m! Current value Vacant (%) persons in 1994. Disregarding the increase in staff Sampo Non-Life Group Sampo Non-Life Group The parent company Sampo employed an due to the acquisition of Kansa General, the Group's (permanent personnel! average of 1 536 persons, their salaries and com- Residential buildings 127244 522 0.8 personnel decreased by two per cent from the pre- missions amounting to FIM 235 340 649.36. Of Office buildings and shops 335 152 2 705 9-9 vious year. this sum FIM 2 183 901.82 was paid to executives Industrial buildings 48019 75 16.7 In 1994, the Group's expense ratio was 25.5 and Board members. Others 8732 646 00 per cent, compared with 21.4 per cent in the previ- Total 519 147 3 948 8.1 ous year. In addition to the falling trend in premi- Group Composition ums written, the increase in the expense ratio was On December 31, 1994, the Sampo Non-Life mainly due to the merger of Kansa General with Group's accounts included the parent company That proportion of all investments that com- million on the shares of the American affiliated the Sampo Non-Life Group, the increase in payroll Sampo Insurance Company Limited, and the sub- prises land and buildings and real estate shares fell company Home Holdings. The strengthening of the overheads, and the non-recurrent investments re- sidiaries Industrial Insurance Company Limited, 1. to 28 per cent, since no significant new real estate Finnish markka resulted in exchange rate losses lating to corporate reorganisation. The Value Added over 30 yrs 11.4% 1. University 17.3% Sampo Enterprise Insurance Company Limited, 2. Tax Act which came into force in June 1994 in- 20-29 yrs 21.1 % 2. College 36.7% Otso Loss of Profits Insurance Company Limited, investments were made during 1994. Some 92 per amounting to FIM 333 million on foreign invest- 3. 10-19 yrs 26.2 % 3. Vocational school 11.6% ments, and these were compensated through the creased operating expenses by almost FIM 8 mil- 4. Insurance Company of Finland Limited and Sampo cent of the real estate was leased on normal-term 6-9 yrs 14.8% 4. Secondary school graduate 8.4% contracts and in compliance with the current level underwriting result as a reduction in the foreign lion. Insurance services remained outside the scope 5. under 6 yrs 26.5 % 5. Elementary school, intermediate Holdings (UK) Limited, each with its own of rents. currency technical provisions and claims paid. of this form of taxation, and thus insurance com- school, comprehensive school 26.0% sub-groups, and Vahinkovakuutusosakeyhtiö Value adjustments amounting to FIM 200 At current value, the investment portfolio of panies are forced to buy the services and goods they Kansa, ST International Insurance Company Lim- million were made on quoted shares, FIM 14 mil- the Sampo Non-Life Group totalled FIM 15.1 bil- need in their tax-free operations at a taxable price, ited, Risk Management Limited and 23 housing lion on other share investments, FIM 86 million lion, of which some 13 per cent was foreign invest- without right of deduction. The Value Added Tax and real estate companies. on land and buildings and shares, and FIM 67 ment. Act allows, however, group registration of insurance Kansa General became a member of the companies and companies under their authority Group on April 15,1994, when the share transac- with close financial, economic and administrative tion between Sampo and Kansallis-Osake-Pankki Combined ratio, % Investments portfolio on Dec. 31, 1994 ties to be considered as one entity for taxation pur- was completed. On January 31, 1994, the Kansa at current values poses, which means that the sale of basically tax- Corporation, Kansallis-Osake-Pankki (KOP) and able services supporting insurance operations is Sampo Insurance Company Limited had signed 140 tax-free within the group. However, despite this ex- an agreement stipulating that the shares of ception, insurance companies still have to pay a _ 120 22 per cent tax on insurance premiums. 100 Other Non-Life Group Companies: Key figures 1994 - - - - Continuous change, extensive development projects, the merger of Sampo and Industrial Mu- Sampo Sampo Industrial tual and the incorporation of Otso I/)ss of Profits Kansa General Otso Insurance Co. ST Inter- Patria FIM mill. Enterprise Insurance (8 1/2 months) 60 of Finland national - - - - Insurance Company Ltd and Kansa General into 4 the Sampo Non-Life Group have all increased the 40 Direct insurance premiums written 1 021.3 845.2 981.8 338.0 145.8 34.6 workload of the personnel and posed a consider- Reinsurance premiums written 1. Bonds and debentures 16.5% 22.5 27.8 505.0 9-1 137.7 2.1 20 -1.3 -27.4 - - - - 2. Credits 7.2% able challenge. In 1994, training systems were de- Claims paid -860.2 -721.3 -1 239.7 -326.7 -163.0 -34.8 -3.2 -26.9 3. Money market investments 9.5% veloped to meet the Group's changed needs, and a Net investment income 141.0 344.7 264.4 -49.8 69-9 23.2 4. tand and buildings 27.8% -63.5 -2.4 1990 1991 1992 1993 1994 complete renewal of the occupational health serv- Operating expenses -350.6 -189.9 -140.2 5. Shares 39.0% -143.1 -34.3 -7.9 •• Expense ratio ice was initiated. -10.7 -10.6 Operating margin before depreciation 172.8 64.5 144.3 -83.7 M Claims ratio 59.7 18.7 -23.0 5.1 Total FIM 15.1 billion The Group's total expenditure on salaries and Profit before appropriations and taxes 96.7 48.7 141.6 -96.4 57.7 20. f -23.6 5.7 commissions amounted to FIM 456 916 242.58, of Profit for the financial year 73.4 34.2 98.7 -96.4 43.7 which the remuneration and commissions paid to 14.9 -23.4 5.2

9 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 Prospects Vahinkovakuutusosakeyhtiö Kansa would first be Significant Events after Closing The laws will apply, for example, the princi- Proposal of the Board for Distribution of Profit The prospects of the Finnish insurance industry in sold to KOP, on April 14,1994, and then to Sampo of the Financial Period ples of the third insurance directives concerning a Sampo Insurance Company Limited's non-restricted shareholders' equity stood at FIM 489 338 548.47, the near future seem relatively bright. Growth in on April 15, 1994. The company's shares were According to a merger agreement signed on March single licence and home Member State prudential which includes a profit for the period of FIM 73 390 925.46. The Sampo Non-Life Group's non-restricted industry continues to be vigorous and is occurring priced at FIM 600 million, of which sum FIM 570 24,1995, Vahinkovakuutusosakeyhtio Kansa will supervision. This means that a Finnish insurance shareholders' equity was 420 687 013-92. The Board of Directors proposes that a dividend of 20 per cent of in most other sectors as well. In the private sector, million was paid by a directed issue, by raising the be merged with Sampo Insurance Company Lim- company is entitled, on the basis of a licence the par value, or FIM 4, be paid on the 15 200 000 A and B shares entitled to dividend. The Board of consumer demand is expected to increase. Due to share capital by FIM 30 million. The number of ited, which owns Kansa General's entire share capi- granted in Finland, to practise insurance business Directors recommends that the company's profit for the year be disposed of as follows: the rapid growth in production, employment has shares increased by 1.5 million to 15.2 million. The tal. The aim is to carry out the subsidiary merger within the territory of the European Union, as per- shown signs of improvement, although the unem- impact of Kansa General's business is included in on December 31, 1995. Before the merger, Kansa mitted either by the right of establishment or the to be paid in dividends FIM 60800 000.00 ployment rate is expected to remain high. In addi- the Group's accounts over a period of eight and a General will transfer its corporate insurance port- freedom to provide services. The Ministry of Social to be transferred to the contingency fund FIM 11600 000.00 tion to high unemployment, the national economy half months. folio to Sampo Enterprise Insurance Company Affairs and Health is the primary controller of Finn- to be retained on the closing account FIM 900 925.46 has to cope with the challenge of reducing the Limited. The merger agreement and the agreement ish insurance companies, including their foreign FIM 73390 925.46 growing indebtedness of the Finnish state. Group Administration to transfer part of the insurance portfolio are sub- operations. Similarly, a foreign insurance company The Annual General Meeting on May 17,1994 con- ject to approval by the Ministry of Social Affairs and domiciled within the European Union and possess- Income from direct insurance can justifiably firmed the number of members of the Supervisory Health. The execution of the merger agreement is ing a licence granted by its home Member State be expected to take an upward turn. On the other Board at 45. Of those members due to step down, in addition subject to approval by a court of law. may practise insurance business in Finland. The hand, as economic activity picks up, the number Mr Krister Ahlström, Mr Henrik Höglund, Mr Jyrki The aim of the arrangement is to improve the authority supervising the insurance industry in the of losses may increase, particularly in motor hull Juusela, Mr Heimo Karinen, Mr Keijo Ketonen, Mr Non-Life Group's cost-effectiveness. company's home Member State is responsible for and motor TPL insurance and workers compensa- Erkki Lahtinen, Mr Seppo Lindblom, Mr Carl G. It was decided on March 24,1995 to increase controlling the company's financial status. tion insurance. Nordman, Mr Jorma Ollila, Mr Seppo Sipola, Mr the share capital of Kansa General by FIM 65 mil- The provisions concerning the calculation Uncertainty in the international investment Timo Summa and Mr Esa Swanljung were re- lion to consolidate the company's solvency. and covering of an insurance company's techni- market is reflected on the Finnish capital market. elected and Mr Pekka Vennamo was elected as a As the result of a transaction on March 13, cal provisions will be amended to meet the require- I he solvency of Finnish insurance companies rests, new member. 1995, Sampo acquired the entire share capital of ments of the third directives on insurance. An in- however, on a strong foundation. Competitive as they are, they stand comparison well in intensify- There were no changes in the composition of Vastuu Reinsurance Company Limited. The Boards surance company's entire technical provisions must ing international competition. the Board of Directors of Sampo in 1994, its mem- of Directors of ST International Insurance Com- be covered. The preliminary confirmation of the bers being Mr Jukka Härmälä (Chairman), Mr Kari pany Limited and Vastuu approved the merger calculation formulae for the technical provisions Redistribution in the savings market during 0. Sohlberg (Vice Chairman), Mr Georg Ehrnrooth, agreement. The parties aim to merge Vastuu with and the life insurance tariffs will be dispensed with. the year under review increased the demand for life Mr Ari Heiniö, Mr Jouko K. Inkinen, Mr Thor Björn ST International on December 31,1995. However, the preliminary confirmation procedure insurance markedly. There is, therefore, consider- Lundqvist and Mr Vesa Vainio. The company's au- On January 27,1995, the Estonian Minister of statutory employment pension insurance and able potential for new business, especially in the ditors are Authorised Public Accountants Mrjaakko of Finance granted Sampo permission to establish workers' compensation insurance will be contin- life insurance market. By European standards, in- Nyman and Mr Thor Nyroos. the first all-Finnish insurance company in Esto- ued. The valuation principles relating to an insur- surance saving is still at a somewhat low level in Finland. nia. Sampo Kindlustuse AS will concentrate on in- ance company's financial statements correspond suring private households. to the former principles, although the original aim The Sampo Non-Life Group will maintain its in drafting the law was to begin assessing invest- leading market position In 1995. Premiums writ- Changes in Legislation ments at current value. The acquisition cost and ten on direct insurance are expected to increase, Finland's membership of the EU and being party the current value of investments must, however, be profitability is expected to remain high and sol- to the EEA agreement are to have a legislative im- entered by balance sheet item as an appendix to vency excellent. The foreign reinsurance portfolio pact on the insurance industry. On April 1, 1995, the Balance Sheet. will continue to be run off according to the cur- rently effective procedure. Finnish insurance legislation will be brought into The new Insurance Contracts Act will enter line with the Council of European Communities' into force on July 1,1995. The Act tightens insur- Corporate reorganisation within the Sampo third directive on non-life insurance, third direc- ance companies' obligation to provide insurance Non-Life Group will continue in 1995. Cost-effec- tive on life insurance and the directive concerning applicants with information and further improves tiveness will be sought by integrating methods of the financial statements of insurance companies. the position of the Policyholder in other respects. operation and production systems. The Group's motivated and professional personnel will continue to guarantee a high level of customer satisfaction.

10 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 CONSOLIDATED PROFIT AND LOSS ACCOUNT

FIM '000 FIM '000 Notes* Jan.l to Dec. 31,1994 Jan.l to Dec. 31,1993 Notes Jan. 1 to Dec. 31, 1994 Jan. 1 to Dec. 31,1993

Premiums Written 1 Depreciation According to Plan Investments Direct Insurance + 3 366 712 + 3 120 409 -65 640 -47 665 Fixed Assets Reinsurance + 619 632 + 574 539 - 107 638 - 106432 Goodwill + 3 986 344 + 3694948 - 39 503 -3215 -212 781 - 157 312 Credit Loss on Premiums - 34 675 -43 761 Operating Margin after Depreciation + 3 951 669 + 3 651 187 + 157 243 + 352 201 Investments 2 Investment Income + 1 618 368 + 1 856750 Other Income Realised Gains on Fixed Assets Investment Charges -878 556 - 692 196 + 6 740 + 35 557 -_0ther Income Revaluation + 17 600 + 20 402 + 18 009 + 739 812 + 1182 154 + 27 142 53 566

Change in the Gross Provision for Unearned Premiums Other Expenses Total Change + 34 512 + 82 583 Realised Losses on Fixed Assets -509 -22 730 Portfolio Transfer -7 035 -JMerExpenses -1 126 - 13 940 + 34 512 + 75 548 -1635 -36670

Profit Prior to Changes in Provisions and Taxes Underwriting Income + 4 725 993 + 4908 889 + 182 750 + 369097

Difference between Booked and Planned Depreciation Claims Incurred -11 241 -67 642 Claims Paid 3 -3 617 354 -3 558 769 Change in the Provision for Claims Provision for Other Risks and Charges Credit Loss Reserve Total Change + 394 479 + 65 185 - 12 082 + 6676 Housing Reserve Portfolio Transfer -II7696 + 696 -1542 Operations Reserve + 394 479 - 52 511 + 1879 Depreciation of Bonds - 3 222 875 -3 611 280 + 24 025 ^Transition Reserve + 6 500 -29 696 Underwriting Margin + 1 503 118 + 1 297 609 -4 886 + 1342

Direct Taxes Reinsurers' Share of Taxes for the Year Premiums Written 1 - 480 790 - 531 643 -62 923 -67881 Taxes from Previous Years + 9 939 Change in the Gross Provision for Unearned Premiums -7 439 - 18 452 + 150 - 10 000 Claims Paid 3 + 418 657 + 473 398 transferred to Capital and Reserves Change in the Provision for Claims - 179 966 -42 503 - 62 984 -67 731 - 249 538 -II9200 Profit for the Year + 103 639 + 235 066 Underwriting Margin for Own Account + 1 253 580 + 1 178 409 Minority Interest in the Profit/Loss for the Year -3 694 + 1500 Operating Expenses 4 ^Wtfc Group, Profit for the Year Salaries and Commissions - 446 949 -394695 + 99 945 + 236 566 Payroll Overheads -171 367 - 143 238 Other Operating Expenses - 265 240 - 130 963 -883 556 -668896

Operating Margin before Depreciation + 370 024 + 509 513

* Refers to Analyses presented in Appendices, pp. 33-46

19 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 CONSOLIDATED BALANCE SHEET

FIM '000 Notes FIM'000 Notes Dec. 31,1994 Dec. 31,1993 Dec. 31, 1994 Dec. 31,1993

17 ASSETS LIABILITIES

Current Assets Current Liabilities ?52 65? 824 %5 Cash at Bank and in Hand 992 359 1 238625 Amounts Due to Reinsurers 422 ^ ^ gg7 Amounts Due from Reinsurers 1 428 894 1 599 268 Accruals and Deferred Income ^ ^ j 355 3^ Prepayments and Accrued Income 1 052 596 1 103436 Other Liabilities Other Current Assets 1 041 726 977 708 Technical Provisions j ^ 955 499 4 515 575 4919037 Provision for Unearned Premiums 9 392 201 8 576 569

Investments Claims Outstanding 10 658148 9 532068 Loans 10 1 068 992 1 290 950 12 864 041 ~ 12110 316 Bonds and Debentures 11, 18 2 598 537 1 649 049 Stocks and Shares 12, 15, 16 3 021 691 2 236705 Untaxed Reserves Real Estate Shares 16 522 510 534 167 Accumulated Difference between Booked and 140 658 126 825 Land and Buildings 16, 18 2 064 091 2 209 503 Planned Depreciation 2q6o6 8524

Other Investments 51948 109687 Credit Loss Reserve 20g66 21 562

Accumulated Difference between Booked Housing Reserve 29864 36364 and Planned Depreciation 6 111 602 111850 ^Transition Reserve 21T994 193 275 9439 371 8141911

Fixed Assets 25 000 Stocks and Shares 13, 15, 16 639 950 711184 Consolidation Reserve Real Estate Shares 16 82 653 73758 24 421 23 585 Minority Interest Land and Buildings 16, 18 669 607 652 205 20 Equipment 196 662 162 737 Capital and Reserves Other Fixed Assets 209 302 157677 Restricted Shareholders'Equity 310 000 280 000 Accumulated Difference between Booked and Planned Depreciation 6 29 056 14975. Share Capital J 2 182 871 1642 934 ResmeFund 1 827 230 1 772 536 Revaluation Reserve 18 209 388 20938268 Other Restricted Reserves 10 570 55 530 Goodwill 451 824 23426 Currency Conversion Differences 2 712 857 2187 878"

Valuation Items Non-Restricted Shareholders' Equity ^ 69 693 Capitalised Interest - 594. 594 Security Reserve 251049 11 191 Other Non-Restricted Equity 99 ^ 236 566 Profit for the Financial Year 420i 687 317 450

3 133 544 2 505 328

16 234 000 14857 504 16 234 000 14857 504

20 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 PARENT COMPANY PROFIT AND LOSS ACCOUNT

FIM '000 FIM '000 Notes Jan. 1 to Dec. 31,1994 Jan. 1 to Dec. 31,1993 Notes Jan. 1 to Dec. 31,1994 Jan. 1 to Dec. 31,199S

Premiums Written 1 Operating Expenses 4 Salaries and Commissions Direct Insurance + 1 021 298 + 2 093 254 -227 061 -296439 Payroll Overheads Reinsurance + 22 525 + 53902 -94 851 -106610 JMer Operating Expenses + 1 043 823 + 2 147 156 - 28 658 - 108712 Credit Loss on Premiums - 13 937 -41623 -350 570 -511761

Operating Margin Before Depreciation Investments 2 5 + 172 780 + 266 784 Investment Income + 709 365 + 991 869 Investment Charges - 364 696 -529671 + 344 669 + 462 198 Depreciation According to Plan 6 Investments -20 719 -25 284 _ FixedAssets Change in the Gross Provision for Unearned Premiums + 42 544 + 224617 -62 448 - 84 472 Merger - + 225 340 -83 167 - 109 756 Portfolio Transfer - -417624 Operating Margin After Depreciation + 42 544 + 32 333 + 89 613 + 157 028

Underwriting Income + 1 417 099 + 2 600 064 Other Income 7 Realised Gains Claims Incurred + 842 + 11 111 _ _J)therhicome__ Claims Paid 3 - 1 004 433 - 1 624 506 + 7 783 + 7 554 Change in the Provision for Claims + 144 209 + 964 204 +8 625 + 18 665 Merger - + 1 860 706

Portfolio Transfer - -2 968950 Other Expenses 8 + 144 209 - 144 040 Realised Losses -443 _J^herExpenses_ - 860 224 - 1 768 546 -1 112 -13 910 -1 555 -13910 Underwriting Margin + 556 875 + 831 518 Difference between Booked and Planned Depreciation 6 -2 389 -58964 Reinsurers' Share of Provision for Other Risks and Charges Premiums Written 1 -11215 -85651 Credit Loss Reserve Change in the Gross Provision for Unearned Premiums -17 179 -11263 -2 091 - Transition Reserve Merger - -61385 + 6191 Portfolio Transfer - + 71184 + 4 100 -17 179 -1464 Direct Taxes Taxes for the Year Claims Paid 3 + 10 644 + 38 494 - 25 075 - 16575 Taxes from Previous Years Change in the Provision for Claims - 15 775 -32 099 + 10 072 + 214

Merger - - 105 271 —^BQsferredjoCapital and Reserves - 10 000 Portfolio Transfer - + 133018 - 25 003 -16361 - 15 775 -4 352 Profit for the Financial Year - 33 525 -52 973 + 73 391 + 86458

Underwriting Margin for Own Account + 523 350 + 778 545

22 SAMPO ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 23 PARENT COMPANY BALANCE SHEET

FIM WO _ _ Notes Dec. 31,1994 fee. 31,1993 FIM '000 Notes Dec. 31,1994 Dec. 31,1993, LIABILITIES 9, 17 ASSETS 9 Current Liabilities Current Assets Amounts Due to Reinsurers Cash at Bank and in Hand 66 202 312 590 Deposits Retained - 103 Amounts Due from Reinsurers Other Liabilities 13 053 7 070 Provision for Unearned Premiums 159 17 339 13 053 7ll73" Claims Outstanding 38 290 54 064 Accruals and Deferred Income Deposits Made 4 438 6 174 Premiums Received in Advance 9 201 20 019 Sundry Debtors 14066 11J98, Direct Taxes 34 084 26595 56 953 88 775 Accrued Annual Holiday Pay 39 769 35 701 Prepayments and Accrued Income Other Accruals and Deferred Income 42 684 76 706 Premiums 327 722 437478 125 738 ~~ ~~ 15902T Accrued Interest Receivable 43 619 46 424 Other Liabilities Pensions and Annuities Paid in Advance 7 946 14 963 Loans from Pension Fund 332 341 357356 Other Prepayments and Accrued Income 15 391 37083, 394 678 535 948 Transferred Charges Payable 32 492 23 318 Loans 1 564 1681 Other Current Assets Sales Prices Payable 112 107 111626 Sales Prices Receivable 22 424 1 557 Due to Affiliated Companies 13115 39 238 Due from Affiliated Companies 135 069 61 112 Other Liabilities 89 603 125 603 Short-Term Investments in Securities 168 430 207 245 581 222 658827 Other Current Assets 80178 79SHL Technical Provisions 406 101 349 804 923 934 1 287 117 Provision for Unearned Premiums 377 114 419 658 Claims Outstanding 5 2 700 913 2845 122 Investments - 3 078 027 3 264 780 Loans 10 682 411 784716 3 798 040 4 089 796 Bonds and Debentures 11 500 853 493041 Untaxed Reserves Stocks and Shares 12,16 Accumulated Difference between Booked and Other than Subsidiary Companies 1 015 983 709799 Planned Depreciation 6 71 508 69119 Real Estate Shares 16 Credit Loss Reserve 9 000 6 909 Subsidiary Companies 165 844 161 844 Transition Reserve - 6 191 Other Companies 538 634 549247, 80 508 82 219" 704 478 711 091 Land and Buildings 16,18 710 504 721 504 Capital and Reserves 20 Other Investments 45 689 43 797 Restricted Shareholders' Equity Accumulated Difference between Booked and Planned Depr. 6 48 493 49555, 3708 411 3513503 Share Capital 19 310 000 280 000 Reserve Fund 2 177 892 1 637892 Fixed Assets Revaluation Reserve 18 _ 172 633 172 633 Stocks and Shares 14,16 Subsidiary Companies 1 480 606 943466 2 660 525 2 090 525 Non-Restricted Shareholders' Equity Other Companies 272 035 275J501, 1 752 641 1 218 967 Security Reserve 69 693 69693 Contingency Reserve 339 348 284348 Real Estate Shares 16 At the Disposal of the Board 797 468 Subsidiary Companies 11142 11142 Profit or Loss Brought Forward 6110 1152 Other Companies 78 907 71_520 90 049 82 662 Profit for the Financial Year 73 391 86458 — 489 339 442 119 Land and Buildings 16,18 306 225 299235 3 149 864 2 532 644 Equipment 122 713 145 815 Other Fixed Assets 101 424 137 796 Accumulated Difference between Booked and Planned Depr. 6 23 015 19 564 — 2 396 067 1 904 039 7 028 412 6704659 7 028 412 6 704659

SAMPO ANNUAL REPORT 1994 14 22 SAMPO ANNUAL REPORT 1994 STATEMENTS OF CHANGES IN FINANCIAL POSITION APPENDICES

CONSOLIDATED STATEMENT ACCOUNTING PRINCIPLES

Finnish insurance companies' accounting and fi- rate that the equalisation amount at the subsidi- the period and in their non-restricted sharehold- FIM '000 1994 1993 n<

Change in Corporate Structure - 13 100 separate items on the Profit and IJOSS Account and been recorded in the Non-Life Group accounts. rate exchange profits or losses under investment Change in Capital and Reserves 572 500 295 763 Glance Sheet. income and expenses. Associated Companies 468 095 - 588 191 Vahinkovakuutusosakeyhtib Kansa has been added to the Non-Life Group's Consolidated Ac- In accordance with the accounting standards valid Valuation and Matching of Current counts for t!>e period April 15-December 31 1994, till the end of1994, associated companies are not Assets, Investments, and Fixed Assets APPLICATION OF FUNDS since subsidiaries are added to the consolidated consolidated in the Consolidated Accounts, butdun- Premium receivables and other current assets have - 280 967 Change in Current Assets - 363 184 accounts as from the acquisition date. dend earned is entered as income in the Profit and been entered in the Balance Sheet at book value -768 584 Change in Investments 216 035 Cross-shareljoldings have been eliminated b)' Loss Account, and shareholdings are entered in the or at a lower probable value. Change in Fixed Assets 554 070 444 964 'he acquisition cost method. The major part of the Balance Sheet. In accordance with the possibility introduced Profit Distribution 61 174 16396 difference between the subsidiary shares' acquisi- In calculating the key figures per share, com- in the instructions of the Ministry of Social Affairs 468 095 - 588 191 tion cost and the companies' capital and reserves panies in which the Non-Life Group has a 20 - and Health, promissory' notes classified as invest- at the time of the acquisition has been presented in 50per cent shareholding and vote and which have ments have been entered in the Balance Sheet at * The effect of revaluation has been eliminated from the operating margin before depreciation. 'he Balance Sheet as an unallocated goodwill. De- a significant impact on the results, have been acquisition cost where the devaluation is only due sedation on the proportion of the goodwill caused treated as associated companies. The associated to the fluctuation in the general interest rate level. hy the equalisation amount is made at the same companies, the Group 's share in their results for The difference between the nominal value and the

SAMPO ANNUAL REPORT 1994 47 26 SAMI'O ANNUAL REPORT 1994 METHODS OF CALCULATION FOR THE KEY FIGURES

acquisition cost of bonds is shown as incomefrom Residential and Business Premises 50-60years tant ofthese is the credit loss reserve. 7 he total credit Methods of calculation applicable to the insurance Operating profit Equity/assets ratio, % at current values interest. Realised gains and losses on investments Industrial Premises and Warehouses 40 years loss reserve may not be more than one per cent of industry have been compiled in collaboration with Operating margin before depreciation on the Profit (Capital and reserves - pensions liability not covered have likewise been entered as income from inter- Technical Equipment in Buildings 15 years an insurance company's combined receivables 'he Helsinki Stock Exchange and the Finnish Bank and Loss Account excluding change in equalisation + minority interest + untaxed reserves, including Inspectorate. est. The current value and Balance Sheet book Computer Hardware, Software, Cars 5 years excluding premiums receivable, or the verifiable provision, revaluation of investments and interest accumulated depreciation difference + revaluation value of bonds and income on interest arising Furniture and Fixtures 10 years or greater probable amount of credit losses. and investment charges on long-term current items - accumulated depreciation difference on land Turnover liabilities +/- other ordinary income and expenses - from the difference between the nominal value and Other bong- Term Liabilities 10 years and buildings) xioo Premiums written - credit loss on premiums + gross depreciation according to plan (Total on Balance Sheet + revaluation items - acquisition cost of debt instruments, entered as Direct Taxes investment income excl. revaluation accumulated depreciation difference on land and interest receivable, have been presented in the Ap- Where essential refurbishing has been carried out, Taxes for the year have been presented separately Result before extraordinary items buildings) pendices. the building's useful life has been reassessed. from previous years' Taxes in the Profit and IMSS Net premiums written Operating profit +/- change in equalisation Stocks and shares have been entered in the Depreciation has also been made on re- Account. Taxesfor the year have been presented in Premiums written - reinsurers' share of premiums provision + revaluation of investments - interest and Claims paid/premiums written ratio, net, % valuations of depreciable investment assets. a way that corresponds to the accrual basis, i.e. Balance Sheet either at acquisition cost or at a lower written investment charges on long-term current liabilities (Claims paid - reinsurers' share allocated to the accounting period. Furthermore, probable value. Shares held as investments have 7he difference between depreciation entered of claims paid) x 100 taxesfor the year include any taxes paid at source been valued on the average price principle. in the Accounts in accordance with the Taxation of Earned premiums, net of reinsurance Result before appropriations and taxes (Premiums written - reinsurers' share of premiums on income from foreign securities. I/ind and buildings have been entered in the Businesses Act and depreciation according to plan Premiums written - reinsurers' share of premiums Result before extraordinary items + extraordinary written - credit loss on premiums) Balance Sheet at acquisition cost less depreciation has been presented as a separate item in the Profit Avoir fiscal tax credit from dividend earned written +/- change in the gross provision for income - extraordinary expenses or at a lower probable value. Certain book values and IMSS Account before changes in untaxed re- has been entered as a dividend-like item under unearned premiums +/- reinsurers' share of change Claims ratio, net, % of land and buildings include revaluations. serves, and the accumulated depreciation differ- investment income. Dividends, guarantee capital ln the gross provision for unearned premiums Return on equity (ROE), % at current values Claims incurred, net of reinsurance x 100 Examples of items capitalised under other ence is shown in the Balance Sheet under both in- interests and avoir fiscal tax credit are entered in (Result before extraordinary items - taxes + (Earned premiums, net of reinsurance - credit loss long-term liabilities are computer systems crucial vestments and fixed assets as well as under un- the accounting period during which the decision Claims incurred, net of reinsurance revaluation of fixed assets +/- change in on premiums +/- change in motor insurance buffer to an insurance company's operations and in- taxed reserves. on the distribution of profit has been made. How- Claims paid - reinsurers' share of claims paid +/- revaluation items) x 100 reserve) tended for long-term use, and refurbishing of ever, avoir fiscal tax credit sums exceeding the change in the provision for claims, excl. change in Average of (capital and reserves - pensions liability owner-occupied and rented apartments, these Unrealised Valuation Differences amount of the income tax for the year will not be equalisation amount +/- reinsurers' share of change not covered + minority interest + untaxed reserves, Expense ratio have been entered at acquisition cost less depre- The differences between the current values and entered, unless it is probable that the credit left 'n the provision for claims including accumulated depreciation difference + (Operating expenses - extraordinary sales) x 100 ciation. book values of investments and fixed assets have unused can be used when income taxes for the revaluation items - accumulated depreciation (Net premiums written - credit loss on premiums) difference on land and buildings) Entries on increases and decreases in the book been presented in the Report by the Board of Di- future accounting periods are calculated. Avoir Adjusted net investment income values of investments have been entered in the rectors. fiscal tax credit based on inter-group profit shar- Net investment income excluding revaluations and Combined ratio, % interest and investment charges on long-term current Solvency capital Balance Sheet. Revaluations have been presented The current values of securities conform to ing has been eliminated from the Non-Life Group's Claims ratio + expense ratio liabilities Capital and reserves - pensions liability not covered as a separate item in the Profit and IMSS Account the market quotations on the date of closing the Profit and Loss Account by deducting it from the + minority interest + untaxed reserves, including under Investments. Revaluations have not been accounts, where such a quotation has been avail- direct taxes for the year. Trading ratio, % Total revenue accumulated depreciation difference + equalisation made in the 1994 Final Accounts. Value adjust- able. Otherwise, the acquisition cost or a lower prob- (Claims incurred, net of reinsurance + operating Earned premiums, net of reinsurance - credit loss provision + revaluation items - accumulated ments have been entered as investment expenses able value, e.g. the value based on net asset value, Pension Schemes expenses - extraordinary sales) x 100 °n premiums +/- change in motor insurance buffer depreciation difference on land and buildings Total revenue and value re adjustments as investment income. has been used as current value. For those employed by the Sampo Non-Life Group's reserve + adjusted net investment income Value re-adjustments have been entered as income The current values of land and buildings and Finnish companies, statutory pension cover has Return on invested capital (ROI), Technical provisions ratio, % up to the original acquisition cost. shareholdings in real estate have been determined been arranged in accordance with the Employees' Net underwriting result % at current values Technical provisions, net, including equalisation in accordance with the requirements laid down Pensions Act, TEL. Revaluations to fixed assets have been entered Earned premiums, net of reinsurance - credit loss on (Result before extraordinary items excluding change amount x loo by the Ministry of Social Affairs and Health, taking in the rei>aluation reserve incorporated in the re- Additional pension cover for those who have Premiums +/- change in motor insurance buffer in equalisation provision + interest and investment (Net premiums written - credit loss on premiums) stricted shareholders ' equity. Value adjustments on into account both income earned from land and joined Sampo before 1982 was arranged fry the reserve - claims incurred, net of reinsurance expenses on long-term current liabilities + non-wearing fixed assets have been entered as in- buildings and market value. pension fund until the end of 1991. It is now pro- revaluation of fixed assets +/- change in Solvency ratio, % vestment expenses, and value adjustments on videdfor those already retired by an optimal pen - Technical underwriting result, net revaluation items) x 100 Solvency capital x 100 wearing fixed assets as depreciation. Other Income and Expenses sion insurance, and by a supplementary TEL Earned premiums, net of reinsurance - credit loss on Average of (total on Balance Sheet - interest-free (Net premiums written - credit loss on premiums) Items such as ordinary realised gains and losses policyfor the others. Also for those employed by In- Premiums - claims incurred, net of reinsurance - liabilities + revaluation items - accumulated Depreciation from sales of real estate shares, and real estate held dustrial Insurance Ud, Patria Reinsurance Com- °Perating expenses depreciation difference on land and buildings) Average = average of figures at the beginning and 'the acquisition cost of depreciable investment arul as fixed assets, and certain remuneration items pany lid, Insurance Company ofFinlatuI I id, and end of the accounting period fixed asset? has been capitalised', and it will be en- have been entered under other income and ex- Otso IJOSS of Profits Insurance Company IJd, addi- ^equalised result tered as depreciation under expenses. Depreciationspenses. Extraordinary items include e.g. realised tional pension cover is provided by a pension in- Operating margin before depreciation +/- change in are made according to the depreciation plan. gains and losses on fixed assets' shareholdings in surance company. equalisation amount - revaluation of investments Planned depreciations have been calculated as subsidiaries. Pension insurance premiums have been en- straight-line depreciations on the original acquisi- tered in the Profit and IMSS Account on the accrual tion cost using the following estimated useful lives: Untaxed Reserves basis. The regulations concerning Finnish accounting Pension liabilities payable from the Non-Life and taxation allow certain untaxed reserves af- Group companies' assets have been presented in fecting profit and tax to be made, 'the most impor- the Appendices.

28 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 METHODS OF CALCULATION FOR SAMPO NON-LIFE GROUP KEY FIGURES THE SHARE PERFORAAANCE KEY FIGURES

1990 1991 1992 1993 1994

Earnings per share Capital and reserves per share P/E ratio Key figures pertaining to the result and profitability of the accounting period (Result before extraordinary items - taxes for the (Capital and reserves + untaxed reserves including Adjusted closing share price on Dec. 31 Earnings/share accounting period - minority interest in the profit for accumulated depreciation difference - pensions Gross Premiums Written FIM mill. 2 577.7 2 657.0 2 313.7 3 694.9 3 986.3 liability not covered) the period + share in associated companies' result - Tbrnover FIM mill. 3321.0 3472.2 3115.9 5 507.9 5 570.0 Adjusted number of shares at the end of the period Market capitalisation dividends from associated companies + depreciation Total Revenue FIM mill. 2 559.4 2 801.5 2 436.3 4 374.4 4 388.4 on shares of associated companies Number of shares on Dec. 31 x closing share price Net Underwriting Result FIM mill. 256.2 -42.7 -102.8 -98.9 587.6 Adjusted average number of shares during the period Adjusted dividend per share on Dec. 31 Adjusted Net Investment Income FIM mill. 226.8 347.1 272.1 1 227.8 Dividend for the period 791.0 Net Technical Underwriting Result FIM mill. -282.4 -583.6 Adjusted number of shares at end of the period Relative share trading volume -517.4 -737.8 -395.4 Operating profit per share Net Technical Underwriting Result/Earned Premiums, Operating profit Number of shares sold through Net of Reinsurance % Adjusted average number of shares during the period Dividend/earnings, % the Helsinki Stock Exchange x 100 -11.7 -22.9 -22.1 -22.9 -11.2 Dividend for the period x 100 Adjusted average number of shares during the period Unequalised Result FIM mill. -72.3 -257.0 -270.9 426.8 344.4 Operating Profit Net asset value per share Earnings as in 'earnings/share' FIM mill. - 207.8 -371.3 -480.3 320.7 301.4 Operating Profit/Total Revenue (Capital and reserves - pensions liability not % -8.1 -13.3 -19.7 7.3 6.9 Profit before Extraordinary Items covered + untaxed reserves including accumulated Effective dividend yield FIM mill. 28.7 -244.3 -58.9 370.2 176.5 Profit before Extraordinary Items/Total Revenue depreciation difference + revaluation items - Dividend/share _ x 100 % 1.1 -8.7 -2.4 8.5 4.0 accumulated depreciation difference on capital Adjusted closing share price on Dec. 31 Profit before Appropriations and Taxes FIM mill. 28.7 - 229.4 -107.7 369.1 182.7 and reserves) Profit before Appropriations and Taxes/Total Revenue % 1.1 -8.2 -4.4 8.4 4.2 Adjusted number of shares at end of the period Return on Equity (ROE) at current values % -32.5 -12.0 -10.1 34.8 5.5 Return on Invested Capital (ROI) at current values % -12.7 -5.0 -4.0 12.5 3.0

Key figures pertaining to solvency

Equity/Assets Ratio at current values % 35.2 30.5 27.8 30.8 32.7 Technical Provisions Ratio % 198.6 210.9 244.6 275.0 285.5 Solvency Ratio % 157.3 134.7 140.0 205.5 212.3 Solvency capital FIM mill. 3797.7 3344.3 2 970.8 6 410.2 7 367.3

Key figures pertaining to underwriting efficiency

Average No. of Personnel 2 365 2 351 2 225 2 642 2 966 Claims Paid/Premiums Written, Net % 74.1 79-5 97.7 98.9 92.2 Claims Ratio, Net % 89.0 101.7 104.8 103.1 83.7 Expense Ratio % 25.1 24.0 25.6 21.4 25.5 Combined Ratio % 114.1 125.7 130.3 124.6 109.1 Trading Ratio % 104.8 110.4 115.3 89.5 88.7

17 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 SAMPO NON-LIFE GROUP KEY FIGURES (CONTINUED) ANALYSES

Non-Life Group Parent Company FIM '000 1990 1991 1992 1993 1994

Share performance key figures 1 PREMIUMS WRITTEN

A Shares Direct Insurance Earnings per share FIM 0.10 -29.58 -8.75 25.52 9.24 Statutory Workers Compensation Insurance 739 006 684 474 44 719 406 548 Operating profit per share FIM -23.08 -41.26 -53.37 23.41 19.83 Non-statutory Accident and Sickness Insurance 185 662 147083 85 492 114 132 Net asset value per share FIM 349 313 285 393 410 Motor Third Party Liability Insurance 462 507 485936 269 366 430 242 Capital and reserves per share FIM 245 214 223 197 220 Motor Vehicle Insurance 469 650 428 043 267 644 373477 116450 Adjusted dividend per share FIM 2.60 - - 4.00 4.00'» Marine Hull Insurance 130 606 14 741 21994 Dividend/share FIM 2.60 - - 4.00 4.00'> Cargo Insurance 136 698 138 466 8 382 66 044 Dividend/earnings % 2 710.9 - - 10.3 43.30•> Fire and Other Property Insurance 892 444 773 328 313 381 571 641 Effective dividend yield % 0.7 - - 1.4 1.9*' Loss of Profits Insurance 147 586 124697 230 4 696 P/E ratio 3857.8 -5.1 -12.6 11.5 23.3 Liability Insurance 126 482 120 234 7 671 58 788 Taxable value FIM 245 114 77 200 150 Credit Insurance 45 101 44789 8 664 12 022 Par value FIM 20 20 20 20 20 __Other Direct Insurance 45 126 42 753 1 008 33670 Market capitalisation, Dec. 31 FIM mill. 3330 1368 990 4028 3 268 3 366 712 3 120 409 1 021 298 2 093 254 No. of shares, Dec. 31 '000 8 940 8940 8940 13 640 15 140 Reinsurance Assumed Adjusted no. of shares, Dec. 31 •ooo 8940 8 940 8 940 13 640 15 140 Domestic Reinsurance Adjusted average no. of shares '000 8 940 8940 8 940 13640 15 140 Premiums Received, Gross 64 863 144174 23 234 42 283 Share trading volume during the period '000 427 265 135 995 2 717 Commissions Paid -9075 -24763 -8 850 -9418 Relative share trading volume % 4.7 2.9 1.5 7.3 17.9 55 788 119411 14 384 32 865 Quotation of Sampo Shares: Foreign Insurance Adjusted average exchange value FIM 402 338 114 238 282 Premiums Received, Gross 718 052 597988 7 104 22 982 . Commissions Paid - 154 208 Adjusted maximum exchange value FIM 430 370 185 305 400 -142 860 1037 -1945 Adjusted minimum exchange value FIM 310 145 40 105 203 563 844 455 128 8 141 21037 Total, Net Adjusted closing share price FIM 370 152 110 294 215 619 632 574539 22 525 53902

B Shares PREMIUMS WRITTEN, NET 3 986 344 3 694948 1 043 823 2 147 156 Par value FIM 20 20 20 20 20 No. of shares, Dec. 31 '000 60 60 60 60 60 REINSURANCE CEDED Dividend per share FIM 2.60 - - 4.00 4.00*' Direct Insurance Average no. of shares '000 60 60 60 60 60 Premiums Paid, Gross 368 309 383 105 13 248 87976 ^Commissions Received - 68 455 -62 073 -1 713 -14 209 299 854 321 032 11 535 73767 Reinsurance Domestic Reinsurance Premiums Paid, Gross 12 166 24356 -231 3 503 SAMPO INSURANCE COMPANY LIMITED KEY FIGURES Commissions Received -3 186 -3 346 59 -279 8 980 21010 -172 3 224 Foreign Insurance Premiums Paid, Gross 212 254 261 203 -172 11012 Claims Paid/Premiums Written Ratio, Net % 65.8 68.5 80.2 78.5 97.6 ^ Commissions Received -40 298 -71602 24 -2 352 Claims Ratio, Net % 84.5 89.5 90.0 83.7 84.0 171956 189601 -148 8 660 Claims Ratio, Net, for Direct Insurance Retained % 82.7 80.1 79-4 73.7 78.3 Total, Net 180 936 210611 -320 11884 '> The Board's proposal to the Annual General Meeting. There are 15.2 million shares entitling to dividend payable for the financial year 1994. TOTAL REINSURANCE CEDED 480 790 531643 11 215 85651

18 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 Non-Life Group Parent Company Non-Life Group Parent Company FIM '000 1994 1993 1994 1993 FIM '000 1994 1993 1994 1993 PREMIUM TAX AND OTHER TRANSFERRED CHARGES INCLUDED I \ PREMIUMS 3 CLAIMS PAID

Premium Tax 492 022 440 729 206 343 323 136 Direct Insurance Fire Brigade Charges 11 774 9193 3 097 6088 Statutory Workers Compensation Insurance 664 555 563408 82 543 325 159 Traffic Safety Payments 5 033 4724 2 761 4325 Non-statutory Accident and Sickness Insurance 125 198 120 268 56 572 92 371 Industrial Safety Charges 15 244 13374 780 7802 Motor Third Party Liability Insurance 467 323 368113 277 555 323 382 Payments under Sec. 58, Occupational Accidents Insurance Act 2 735 367 1601 Motor Vehicle Insurance 7 479 337 525 295 586 174 954 245 832 Government Medical Expenses Fee 113177 89 504 Marine Hull Insurance 29 500 65 558 158 510 72 295 12 847 35 297 644 729 242 848 408 510 Cargo Insurance 560 259 74843 75097 4 660 36811 The following insurance premiums have been collected as Fire and Other Property Insurance 562 793 484254 183 618 339026 accessories of Statutory Workers Compensation Insurance, Loss of Profits Insurance 80 170 50 954 106 2101 and rendered to the Central Unemployment Fund and Liability Insurance 56 282 53 085 6078 30 376 Employees Group Life Assurance Pool. Credit Insurance 153 450 61 378 44 427 16601 Other Direct Insurance 43153 22 553 16 886 21439 Unemployment Insurance 5 629 517 3995428 61 749 2 595049 2 723 802 2 166991 860 246 1468 395 Employees Group Life Assurance 79 856 59856 1 561 33832 Reinsurance Assumed Domestic Business 111 662 103 161 34 628 26606 ^Foreign Business 781 890 1 288 617 109 559 129 505 2 INVESTMENTS 893 552 1 391 778 144 187 156111

TOTAL CLAIMS PAID Investment Income 3 617 354 3 558 769 1 004 433 1 624 506 Interest 353 058 633440 126053 318 627

Dividends from Subsidiaries - - 68 600 2 250 REINSURANCE CEDED Other Dividends 58 109 28905 19035 11158 direct Insurance 247 939 144 475 9 890 40 243 Avoir Fiscal Tax Credit 15 757 8 020 27 880 4115 Reinsurance 170 718 328 923 754 -1749 Income from Land and Buildings 165 837 161774 59 855 85 699 418 657 473 398 10 644 38494 Income from Real Estate Shares 61 664 68 227 44 814 60 797 Realised Gains on Investments 853 286 263874 297 944 117046 Value re-adjustments 51 981 539869 49 229 343479 4 SALARIES, COMMISSIONS AND PERSONNEL Exchange Profits 30 559 113807 11739 39629 Other Income 28 117 38834 4 216 9 069 Executives 8 464 9217 2 184 3709 1 618 368 1 856750 709 365 991869 Other Personnel 448 452 404 306 233 157 302 457 Investment Charges Total 456916 413 523 235 341 306 166 Interest 182 369 111608 64 398 63938 Expenses for Land and Buildings 49 713 41 538 23 384 28 589 Shares of Profit have not been paid. Property Tax 9 361 6646 2 864 3093 Expenses for Real Estate Shares 74 357 65842 53 085 61857 Average No. of Personnel 2 966 2 642 1536 2 058 Realised Ix)sses on Investments 10 673 7422 10 596 5825 Value Adjustments on Investments 367 292 366699 175 423 343652 Exchange Losses 139 982 66871 31 982 18 213 Other Charges 44 809 25 570 2 964 4 504 878 556 692 196 364 696 529671 Revaluation

Revaluation of Investments - 17 600 - -

NET INVESTMENT INCOME 739 812 1 182 154 344 669 462 198

22 SAMPO ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 34 5 RESULT OF SAMPO'S INSURANCE BUSINESS RETAINED Non-Life Group Parent Company FINTOOO 1994 1993 1994 1993 1990 1991 1992 1993 1994 ACCUMULATED DEPRECIATION DIFFERENCE ON THE BALANCE SHEET, DEC. 31 Investments Net Premiums Earned 2 174489 2 283 179 2 163 194 2 050 750 1 044 036 Net Investment Income, excl. Revaluations 165915 192 417 -43 032 462 198 344 669 Accumulated Depreciation Difference on the Balance Sheet, Jan. 1 111 855 52 361 49 555 58616 Claims Incurred (excl. Change in Equalisation Amount) - 1 781 251 -1 994631 - 1831 346 -1 697 272 -945 735 Transfers to/from Fixed Assets - 6 696 -6052 -406 -6052 Operating Expenses -586515 -575 314 -512 162 -511 761 - 350 570 Group Reorganisation 38 748 Change in Corporate Form -23 592 ^Depreciation Difference in the Profit and Loss Account 6 443 UNEQUALISED RESULT -27362 -94 349 -223 346 303915 92 400 26 793 -656 20 583 111602 111850 48 493 49 555 Change in Equalisation Provision -33603 128498 123018 - 14786 -1327 Fixed Assets Change in Motor Insurance Buffer Reserve -66282 -54 764 - 128 262 - 22 345 81 707 Accumulated Depreciation Difference on the Balance Sheet, Jan. 1 14 975 -31849 19 564 -18464 Revaluation of Investments 281 700 276000 Transfers to/from Investments 6696 6052 406 6052 Sales 4 3 Group Reorganisation UNDERWRITING RESULT 154 453 -20 615 47410 266784 172 780 Change in Corporate Structure (= Operating Margin before Depreciation as shown in the Profit and Loss Account) -6405 Adjustment to Real Estate Utilisation Time 2 583 -80 ^Depreciation Difference in the Profit and Loss Account OFFICIAL SOLVENCY TREND, SAMPO INSURANCE COMPANY LIMITED 4 798 3 045 38 381 29056 14975 23 015 19564 40 849 Equalisation Provision, Dec. 31 654702 526 204 403 185 270 500 271 827 TOTAL ACCUMULATED DEPRECIATION DIFFERENCE 140 658 % of the Full Amount 36.3 26.5 19.2 18.8 18.8 126825 71 508 69119

Land and Buildings 132 529 123978 67 537 69115 Fguipment and Other Fixed Assets 8 129 6 DEPRECIATION ACCORDING TO PLAN 2 847 3 971 4 140 658 - 126825 71 508 69119 Non-Life Group Parent Company FIM '000 1994 1993 1994 1993 7 OTHER INCOME DEPRECIATION DIFFERENCE IN THE PROFIT AND LOSS ACCOUNT Investments °ther Ordinary Income 20 323 18009 7 783 7 554 Depreciation According to Plan 65 640 47665 20 719 25 284 5?her Extraordinary Income 6 819 35 557 842 Additional Depreciation -2 037 11 111 27 142 53 566 8 625 Depreciation Booked -72 083 -72 421 - 20 063 -45867 18665 -6 443 -26793 656 - 20 583 Fixed Assets 8 OTHER EXPENSES Depreciation According to Plan 107 638 106432 62 448 84472 Depreciation Booked - 112 436 147 281 -65 493 - 122 853 °ther Ordinary Expenses 1 112 -4 798 -40849 -3 045 -38381 31 1 112 1 Ql!]erJixtraordinary Expenses 523 Goodwill 36639 443 13909 1635 36670 Depreciation According to Plan 39 503 3215 -— 1555 13910 Depreciation Booked - 39 503 -3215

TOTAL DEPRECIATION DIFFERENCE -11 241 -67 642 -2 389 -58964

36 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 !2 SHAREHOLDINGS IN OTHER COMPANIES 9 AMOUNTS DUE TO OR EROM SUBSIDIARIES Non-Life Group Parent Company Parent Company FIM'000 _ ^994 1993, Par value Book value Book value Name of Company No. of shares Holding( %) Votes( %) FIM'000 FIM '000 Holding (%) Votes (%) FIM '000 Due from Subsidiaries PUBLIC COMPANIES Current Assets 1 384 3185 Due from Reinsurers BANKING AND FINANCE - 2 032 Prepayments and Accrued Income Kansallis-Osake-Pankki 18944 186 1.82 1.82 94721 104 761 1.32 1.32 75792 132 924 60 521 Other Current Assets Unitas Ltd 11 215 837 2.32 2.45 112 158 136 135 1.59 1.64 93035 Investments 78 376.. Loans 78 891 'NSURANCE AND INVESTMENTS 144114 213 199 Pohjola Insurance Company Ltd 276 222 0.68 0.14 1381 12 782 - - - 218 880 2.74 4378 Due to Subsidiaries SYP-invest Oy 4.15 8829 0.91 0.60 1485 Due to Reinsurers 1969 791 OTHER SERVICES Accruals and Deferred Income 19 049 723 Effjohn OyAb 674 111 4.97 6.29 13482 33699 - — Other Liabilities 8 780 34 215 265000 1.68 1.68 530 13 250 - - — 2 900 767 1 Espoon Sähkö Oy Provision for Unearned Premiums Finnair Oy 2 376697 3.43 3.43 11883 47 368 0.75 0.75 12 035 403 820 438 251 Claims Outstanding Finnlines Oy 1 188 568 6.20 6.20 11886 23618 - - — 436 518 474747 fesko Oy 890 300 0.99 0.02 8903 37828 0.67 0.02 27021 '•ounais-Suomen Sähkö Oy 43 790 1.63 1.63 438 9563 — — _ The Sampo Non-Life Group Companies, Kaleva Mutual Life Insurance Company and Insurance Company Sampo Pension Limited °y Stockmann Ab 682 670 4.74 6.29 13653 69283 1.87 3.03 26 260 have been treated as affiliated companies on the Balance Sheet. Tamro-Yhtymä Oy 5872 830 12.22 12.22 58728 118017 8.58 8.58 90735

METAL INDUSTRY 10 LOANS Fiskars Oy Ab 226258 3.83 3.80 4 525 28998 1.70 1.80 13037 Metra Oy Ab 1 318876 4.90 6.22 26378 136958 1.14 1.93 36005 Non-Life Group Parent Company Outokumpu Oy 535000 0.43 4.30 5 350 44134 0.14 1.39 14231 1994 1993, FIM '000 1994 1993 Rautaruukki Oy 1 223 501 1.02 1.02 12 235 46407 0.53 0.53 24261 0.52 0.52 Valmet Oy 222 300 4446 19167 - - - 2 232 Loans to Executives 2 594 2 416 2 357 FORESTRY 625 -12.00 Enso-Gutzeit Oy 3877 070 1.81 1.76 38 771 119734 Interest (%) -9.70 6.50-12.00 6.25 -9.70 6.50- 0.55 0.51 47858 10 Kymmene Oy 6 154 512 7.51 7.51 123090 270972 0.81 0.81 Average Ix>an Period (years) 10 10 9 29369 Metsä-Serla Oy 508984 1.86 4.93 25449 66317 0.12 0.19 5674

It has been agreed that the Managing Directors' retirement age should be 60-65, CONGLOMERATES and that of the parent company's Managing Director should be 60. ^er-YhtymäOy 415000 1.75 0.19 8 300 34030 0.59 0.06 11480 Asko Oy 608 311 8.63 8.63 30 416 121563 7.62 7.62 115448 'ustrumentarium Oy 235047 1.17 1.49 2 350 21913 0.99 1.27 18626 11 VALUATION OF BONDS °y Nokia Ab 1 903 378 2.54 4.76 38068 302 634 0.21 0.40 21958 °y Partek Ab 2 985407 7.75 7.75 29854 142 314 0.70 0.70 16206 2 541 570 1.67 1.67 25416 127883 Investments Via Oy 0.39 0.39 50 359 536096 °y Tampella Ab 2 220000 2.43 2.43 11100 31080 - - Market Value 2 539 746 1 760 378 506 689 493041 Book Value 2 600 998 1649049 500 853 618 °THER INDUSTRIES Capitalised Interest Arising from the Difference between Book and Par Values - 8 107 -2 254 166 Aamulehti-yhtymäOy 181809 2.64 2.12 1818 9161 0.01 0.01 38 Cultor Oy 1 219803 5.29 6.38 14638 123304 0.53 0.54 15 642 The difference between book value adjusted by capitalised interest and market value jHtamäki Oy 396850 1.34 2.50 7937 35810 0.34 0.75 7991 is accounted for by revaluation items not booked. Kemira Oy 550000 0.46 0.46 5 500 18 700 0.08 0.08 3400 Raision Tehtaat Oy 101 000 0.83 0.10 1010 8 082 —

JäSfeltOy 423021 6.41 7.17 4230 8175 — _ _

JTAL 2 332 469 757945

SAMPO ANNUAL REPORT 1994 21 22 SAMPO ANNUAL REPORT 1994 Non-Life Group Parent Company 13 NON-LIFE GROUP'S FIXED ASSETS SHAREHOLDINGS IN SUBSIDIARIES AND RELATED HOLDINGS

Par value Book value Book value Name of Company No. of shares Holding (%) Votes (%) FIM '000 KIM '000 Holding (%) Votes (%) I T M '01K) Par value Book value Name of Company No. of shares Holding (%) FIM '000 FIM '000 OTHER COMPANIES INSURANCE COMPANIES Aim Brand 71445 _ _ DKK 7 145 8 575 — — - Avardo Oy 1015 10.00 10.00 102 4370 - - - Insurance Company Sampo Pension Ltd 1409 46.97 14090 14090 Devoco Oy Ab 7020 27.00 27.00 7020 6554 27.00 27.00 6 554 Pension Varma Mutual Insurance Company 5 50.00*) 5000 5060 1628 Innopoli Oy 70667 7.56 7.56 7067 4268 2.85 2.85 Hansa Kindlustus 1 20.00 SEK - 6939 Oy InvestaAb 1 288050 17.12 17.12 25 761 39 069 - - - Kaleva Mutual Insurance Company 25000 50.00*) 25000 25639 Kansalliset Liikekiinteistöt Oy 291 34.73 34.73 291 000 293568 - - - Nova Life Insurance Company Ltd 12 500 25.00 12 500 28750 Lanor Oy 9026 2.91 2.91 9026 6808 2.91 2.91 6808 Teva Re Mutual Insurance Company 100000 100.00*) 10 000 75811 Orion-Yhtymä Oy 244900 0.49 0.04 2 449 20080 0.21 0.02 4411 Vastuu Reinsurance Company Ltd 7700 61.60 770 4274 Otava kustannusosakeyhtiö 22 200 1.89 1.89 444 5994 - - - Polytypos Oy 2000 20.00 20.00 200 8064 20.00 20.00 8 064 TOTAL 160 562 Oy Radiolinja Ab 987 4.83 0.32 4935 3 510 1.73 0.12 978 Suomen Riskirahasto Ky I 30 10.00 10.00 3 000 2 775 - - — *) Share of Guarantee Capital Suomen Sähköverkko Oy 3287 5.24 5.24 3287 7001 - - -

TOTAL 410636 28 443 Par value Book value No. of shares ^uiie of Gimpam Holding (%) FIM '000 FIM '000

TOTAL, OTHER SHAREHOIDINGS 278 586 229 596 OTHER COMPANIES

TOTAL SHAREHOLDINGS 3021691 1015983 Autovahinkokeskus Oy 2 558 35.54 6395 6371 Sampo Finance Ltd 800 000 50.00 40 000 75 000 Rahoitusosakeyhtiö Finnovator 24000 21.05 240 600 Fundamental Invest Oy 125000 10.00 2 500 5000 Hansa Industrial Holding B.V. 24000 40.00 NLG 24 000 50 577 Home Holdings Inc. 1 319567 5.64 USD 22 433 62 590 Huoneistokeskus Oy 120 30.00 960 420 Industrial-Hansa Reinsurance Management A.B. 50 50.00 SEK 25 17 fäinteistövarma Oy 685 22.73 69 100 Suomen Oikeuspalvelu 3400 20.00 340 340 Finnish Loss Survey Ltd 5000 50.00 5000 5012 Trygg-HansaSPP Holding Ab 288 000 0.34 SEK 2 880 30150 Unsa Oy 2 267831 39-91 226 783 226783 tyjhinkopalvelu Oy 360 20.00 108 108

TOTAL 463067

TOTAL, OTHER SHAREHOLDINGS 16321

TOTAL SUBSIDIARIES AND RELATED SHAREHOLDINGS 639950

SAMPO ANNUAL REPORT 1994 47 22 SAMI'O ANNUAL REPORT 1994 Par value Book value Par value Book value Name of Company No. of shares Name of Company No. of shares Holding (%) FIM '000 FIM '000 Holding (%) FIM '000 FIM '000

SUBSIDIARIES INCLUDED IN THE NON-LIFE GROUP FINAL ACCOUNTS INSURANCE COMPANIES

Oy Finnish Captive & Risk Services Ltd 800 80.00 80 80 Insurance Company Sampo Pension Ltd 1409 46.97 14090 14 090 Oy Haveri Ab 20 100.00 2 9 Kaleva Mutual Insurance Company 15000 30.00*) 15000 15479 Oy Imico Insurance Systems 200 100.00 200 1002 Vastuu Reinsurance Company Ltd 7700 61.60 770 4274 Vahinkovakuutusosakeyhtiö Kansa 4 000 000 100.00 400 000 604800 Otso I^ss of Profits Insurance Company Ltd 900 000 100.00 90 000 120 503 TOTAL 33842 Patria Reinsurance Company Ltd 50 000 100.00 50000 118760 Risk Management Ltd 400 100.00 4000 4000 Sampo (UK) Holdings Ltd 10 000 100.00 GBP 10 199576 OTHER COMPANIES ST International Insurance Company Ltd 9 000 000 100.00 45 000 86704 Insurance Company of Finland Ltd 120000 80.00 12 000 38 750 Autovahinkokeskus Oy 1856 25.78 4640 4 630 Industrial Insurance Ltd 500000 100.00 50000 249850 Sampo Finance Ltd 800 000 50.00 40 000 75000 Teva Holding B.V. 24000 100.00 NLG 24 000 60020 Fundamental Invest Oy 125000 10.00 2 500 5000 Sampo Enterprise Insurance Company Ltd 500 000 100.00 50000 299 900_ Industrial-Hansa Reinsurance Management A.B. 50 50.00 SEK 25 17 Kiinteistövarma Oy 685 22.73 69 100 TOTAL SUBSIDIARIES 1 783954 Suomen Oikeuspalvelu Oy 3 400 20.00 340 340 Finnish Loss Survey Ltd 2 480 24.80 2 480 2 480 Trygg-HansaSPP Holding AB 288000 0.34 SEK 2 880 30150 Unsa Oy 1134 103 19.96 113410 113410 Vahinkopalvelu Oy 360 20.00 108 108 14 PARENT COMPANY'S FIXED ASSETS SHAREHOLDINGS IN SUBSIDIARIES AND REIATED HOLDINGS TOTAL 231 235 Par value Book value Name of Company No. of shares Holding (%) FIM '000 F1M '000, TOTAL, OTHER SHAREHOLDINGS 6957 SUBSIDIARIES TOTAL SUBSIDIARIES AND RELATED HOLDINGS 1 752 641 Vahinkovakuutusosakeyhtiö Kansa 4000 000 100.00 400 000 604 800 *) Share of Guarantee Capital Otso Loss of Profits Insurance Company Ltd 810000 90.00 81000 70 577 Risk Management Ltd 400 100.00 4 000 4 000 Sampo (UK) Holdings Ltd 6317 63.17 GBP 63 126025 ST International Insurance Company Ltd 9000000 100.00 45000 86704 Insurance Company of Finland Ltd 120000 80.00 12 000 38750 Industrial Insurance Ltd 500 000 100.00 50000 249850 Sampo Enterprise Insurance Company Ltd 500 000 100.00 50 000 299900,

TOTAL SUBSIDIARIES 1 480 606

43 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 15 ASSOCIATED COMPANIES 17 CONTINGENT LIABILITIES AND PLEDGED ASSETS

The following companies have been treated as associated companies in 1994: Non-Life Group Parent Company FIM '000 1994 1993 1994 1993 Vastuu Reinsurance Company Ltd (61.6 %), Nova Life Insurance Company (25 %), Hansa Kindlustus (42 %), Devoco Oy (27 %), Polytypos Oy (20 %), Mortgages for Own Loans 43 930 46 007 1 604 1 684 Rakennus Oy Leo Heinänen (20 %), Autovahinkokeskus Oy (35,54 %), Unsa Oy (39-91 %), Sampo Finance Ltd (50 %), Suomen Oikeuspalvelu Oy (20 %), Pledges against Own Liabilities 485 664 635 210 477 483 380893 Finnish Ixtss Survey Ltd (50 %), Huoneistokeskus Oy (30 %), Rahoitusosakeyhtiö Finnovator (21.05 %), Vahinkopalvelu Oy (20 %) and Kansalliset Own Pension Liability 2 796 4 503 2 222 3 423 Liikekiinteistöt Oy (34.73%) Collateral against Own Foreign Liabilities 104 850 109 501 Unamortized Acquisition Cost of Reassurance Deducted from the and in 1993, the following companies: Provision for Unearned Premiums 58 870 36 958 Other Own Liabilities 562 - Vastuu Reinsurance Company Ltd (49.6 %), Nova Life Insurance Company (25 %), Finnish Holdings Ltd (50 %), Hansa Kindlustus (20 %), Devoco Oy Ab Other Liabilities 63 500 (27 %), Polytypos Oy (20 %), Rakennus Oy 1*0 Heinänen (20 %), Autovahinkokeskus Oy (26.06 %), Unsa Oy (39-91 %), Sampo Finance Ltd (50 %), Index Option Agreements 9631 _ PSP - Sampo Rahasto - Oy (20 %), Suomen Oikeuspalvelu Oy (20 %), Finnish Ix»s Survey Ltd (25 %), Huoneistokeskus Oy (30 %) and Rahoitusosakeyhtiö Finnovator (21.05 %) The Sampo Non-Life Group has no other liabilities as specified in the Finnish Insurance Companies Act, Chapter 10, Section 8, Sub-Section 4. Non-Life Group FIM '000 1994 1993

Dividends Received from Associated Companies 8 730 1 125 18 REVALUATION AND REVALUATION RESERVE Share of Associated Companies' Profit for the Year 14 564 29 363 Share of Associated Companies' Non-Restricted Equity 37 609 - 5 647 Non-Life Group Parent Company Revaluation Revaluation Value Adjustments on Shares in Associated Companies - 13 365 Revaluation Revaluation £JM '000 of Investments Reserve of Investments Reserve

Revaluation, Dec. 31,1993 400 752 209 388 350832 172633 16 TAXABLE VALUE OF LAND AND BUILDINGS, STOCKS AND SHARES Depreciation on Revaluation of Real Estate held as Investments - 5 287 -5 284 Non-Life Group Parent Company Annulment of Revaluation of Real Estate held as Investment - 2 000 _ FIM 'OOO 1994 1993 1994 1993. Decrease in the Revaluation of Bonds Sold - 7 206 - Investments Stocks and Shares 3 758 202 2 849 974 933 775 742 015 Revaluation, Dec. 31,1994 386 259 209 388 345 548 172 633 Real Estate Shares 893 046 531 360 533 879 711091 Land and Buildings 1011851 1 316863 339 063 340 730, 5 663 099 4 698197 1 806 717 1 793836 19 DISTRIBUTION OF SHARES Fixed Assets Stocks and Shares 475 938 332 429 1 277 870 753 246 Non-Life Group Parent Company 1994 1W 10Q4 1003 Real Estate Shares 186 877 71976 76650 82 662 Land and Buildings 273 863 348 995 128 507 122 306 A Shares 15 140 000 13 640 000 936 678 753400 1 483 027 958 214 15 140 000 13 640 000 Shares 60 000 60 000 60 000 60 000

TOTAL TAXABLE VALUE 6 599 777 5451 597 3 289 744 2 752 050 Total No of Shares 15 200 000 13 700 000 15 200 000 13 700 000

Par value/Share (FIM) 20 20 20 20 A Shares held by the Parent Company 108 727 No. of Parent Company A Shares held by the Non-Life Companies 142 711 33 735

44 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 AUDITORS' REPORT

20 STATEMENT OF CHANGES IN CAPITAL AND RESERVES, 1994

Non-Life Group Parent Company F1M '000 1994 1994

RESTRICTED Share Capital, Jan. 1 280 000 280 000 Share Capital Rise 30 000 30 000 Reserve Fund, Jan. 1 1 642 934 1 637 892 Issue Profit 540 000 540 000 Transfer to Other Restricted Reserves -2 — Other Decrease -61 — To the Shareholders of Sampo Insurance Company Limited Revaluation Reserve, Jan. 1 = Dec. 31 209 388 172 633 We have audited the books, accounts and administration of Sampo Insurance Company Limited Other Restricted Reserves, Jan. 1 26 — for the financial year 1994. The accounts prepared by the Board of Directors and the Chief Execu- Transfer from Reserve Fund 2 — tive Officer comprise the report of the Board of Directors, consolidated and parent company profit Currency Conversion Differences, Jan. 1 55 530 — and loss accounts, balance sheets and appendices. Based on our audit we express our opinion on Decrease - 44 960 - these final accounts and on the company's administration. 2 712 857 2 660 525 The undersigned Jaakko Nyman has scrutinised the accounts for the financial year and sub- mitted a separate report thereon. NON-RESTRICTED We have conducted the audit in accordance with accepted auditing standards. These stand- Security Reserve, Jan. 1 = Dec. 31 69 693 69 693 ards require that we plan and perform the audit in order to obtain reasonable assurance as to Other Non-Restricted Reserves, Jan. 1 247 757 285 968 whether the final accounts are free from material misstatement. The purpose of our audit of the Increase 148 675 141 958 administration has been to see that the Supervisory Board, the Board of Directors and the Chief Decrease - 145 383 -81671 Profit for the Financial Year 99945 73 391, Executive Officer have complied with the rules of the Insurance Companies Act and the Finnish 420 687 489 339 Companies Act. 3 133 544 3 149 864 In our opinion, the final accounts have been prepared in accordance with the Finnish Ac- counting Act and other rules and regulations governing the preparation of final accounts in Fin- land. The final accounts may be adopted and the parent company's Supervisory Board, the Board of Directors and the Chief Executive Officer may be discharged from liability for the year audited by us. The proposal made by the Board of Directors for the treatment of the results is in compli- ance with Finnish legislation. Helsinki, March 24,1995 We have studied the interim report published during the financial year. In our opinion, the interim report has been prepared in accordance with the relevant regulations. SAMPO INSURANCE COMPANY LIMITED

Board of Directors Tlirku, April 4,1995

ThorNyroos Jaakko Nyman Jukka Härmälä Kari O. Sohlberg Georg Ehrnrooth Authorised Public Accountant Authorised Public Accountant Chairman

Ari Heiniö Thor Björn Lundqvist Vesa Vainio

Jouko K. Leskinen Managing Director

SAMPO ANNUAL REPORT 1994 47 46 SAMI'O ANNUAL REPORT 1994 STATEMENT BY THE SUPERVISORY BOARD NON-LIFE GROUP: DIRECT UNDERWRITING RESULT BY CLASS 1990 - 1994

Retained business. No investment income or operating expenses have been allocated to the classes in this calculation. The figures in the table affect results. Change in the Change in the Premiums Premiums provision for un- Claims provision Underwriting Claims ratio, OM mill. written, gross written.net earned premiums paid for claims result.net %

STATUTORY WORKERS 1994 739.0 722.7 39.0 -661.3 • 78.9 21.6 97.2 COMPENSATION 1993 684.5 668.0 1.6 559.6 • 10.0 100.1 85.1 •NSURANCE 1992 391.6 375.5 0.5 306.6 - 53.0 16.3 95.7 1991 460.2 446.0 2.0 299.0 124.1 24.9 94.4 1990 459.4 453.7 0.5 291.2 125.6 37.4 91.8

VOLUNTARY ACCIDENT 1994 185.7 182.5 13.4 125.2 13.0 83.7 57.3 INSURANCE 1993 147.1 145.2 6.0 120.0 - 0.3 30.8 79.6 131.5 130.0 1992 - 0.4 - 99 8 - 0.7 29.I 77.5 The Supervisory Board has received the Accounts for Sampo Insurance Company Limited for the 1991 129.5 128.2 3.0 - 92.1 - 3.4 35.7 72.8 1990 125.5 124.4 - 0.4 financial year 1994 together with the consolidated accounts of the Sampo Non-Life Group and - 92.0 - 1.7 30.3 75.5 the Auditors' Report concerning these. The Supervisory Board has found no cause for criticism on MOTOR VEHICLE 1994 469.7 466.0 12.0 337.5 5.4 145.8 69.5 •NSURANCE 1993 428.0 422.2 2.2 295.6 1.3 130.1 69.4 account of the above, and therefore submits the Accounts and the Auditors' Report to the Annual 1992 378.6 372.5 9.8 275.9 5.3 111.6 70.8 1991 401.1 10.6 General Meeting and recommends that the Profit and Loss Account and Balance Sheet for Sampo 406.5 276.2 5.7 108.6 72.2 1990 376.3 373.7 3.9 283.7 Insurance Company Limited together with the Consolidated Profit and Loss Account and Balance 7.1 77.0 Sheet for the Sampo Non-Life Group be approved and that the proposals for the disposal of the MOTOR TPL 1994 462.5 449.6 115.3 467.3 • 71.8 25.8 95.4 1993 485.9 469.4 - 6.7 368.1 - 36.1 58.4 87.4 503.6 484.2 profit for the financial year moved by the Board of Directors be accepted. 1992 107.1 365.2 - 5.7 6.2 98.4 1991 561.8 546.3 28.8 381.8 - 88.2 47.5 90.8 1990 593.3 581.4 • 84.2 357.3 118.1 21.8 95.6

LIABILITY 1994 126.5 108.3 1.8 Helsinki, April 5,1995 55.8 26.2 28.1 74.5 1993 120.2 99-9 2.1 51.5 - 5.3 45.2 55.6 1992 63.3 56.6 3.7 40.7 11.8 7.9 87.0 1991 69.5 66.5 1.0 35.9 11.2 18.5 71.8 For the Supervisory Board 1990 69.2 64.7 0.3 36.2 3.3 32.2 50.6 L°SS OF PROFITS 1994 147.6 65.0 Kalevi Numminen 2.5 - 32.0 7.2 37.6 39-7 1993 124.7 69.2 0.7 - 30.2 1.6 1992 3.8 3.7 36.7 46.4 0.2 - 3.0 0.2 0.3 919 1991 3.3 3.2 0.2 - 1.1 0.3 1.6 1990 2.8 2.8 46.6 0.3 - 1.0 0.0 1.4 41.7 F'RE AND OTHER 1994 892.4 779.0 4.8 501.2 8.2 290.8 PROPERTVINSURANCE 773.3 62.9 1993 639.3 - 0.2 421.7 7.7 225.1 64.8 1992 571.8 503.4 47.3 395.8 55.2 210.1 61.8 1991 573.9 537.4 12.4 308.2 42.0 174.8 66.7 1990 516.1 469.7 14.0 296.6 26.8 132.2 71.0 C00DS IN TRANSIT 1994 253.2 190.5 1.2 120.2 21.9 47.2 75.1 (CARGO & HULL) 1993 269.0 179.6 4.7 122.4 47.1 .89.4 - 5.5 73.1 1992 75.6 0.4 - 65.4 21.1 92.9 10.5 72.2 1991 78.5 0.5 - 62.0 1.0 17.9 101.8 77.3 1990 0.8 - 65.1 11.6 13.8

OTHER DIRECT 1994 90.2 63.4 11.7 - 178.3 71.6 31.6 142.1 INSURANCE 1993 87.6 62.7 - 0.7 - 53.5 - 0.0 8.4 86.4 1992 41.1 31.6 - 0.3 - 27.2 - 5.0 - 0.9 103.0 1991 44.8 37.9 2.0 - 20.9 - 5.2 13.8 65.5 1990 36.9 28.1 - 2.1 - 19-9 - 1.4 4.7 81.9

U'RKCT INSURANCE 1994 3 366.7 3 027.0 194.2 2 478.7 - 93.4 649.0 79-9 1993 3 120.4 2 755.6 TOTAI. - 1.1 • 2 022.5 - 49.9 681.9 75.2 1992 2 174.6 2 033.1 - 46.3 1 579.6 - 5.4 401.7 2 342.5 798 1991 2 245.2 - 45.4 1 477.2 - 279.1 443.4 79.8 1990 2 281.2 2 188.1 - 95.5 1 443.0 - 289.0 360.6 82.8

qj^miuml s written, net: Premiums written - reinsurer's share of premiums written - credit loss on premiums "ange in the provision for unearned premiums: Change in the provision for unearned premiums - reinsurers' share of change in the provision for unearned premiums +/- chanee in motor insurance buffer reserve r 6 lijaimspaid: Claims paid - reinsurers' share of claims paid Ch^ ;ang e in the provision for claims: Change in the provision for claims excl. change in equalisation amount - reinsurers' share of change in the provision for claims underwriting result: Clai "u"6Premiums wntten, net + change in the provision for unearned premiums - claims paid - change in the provision for claims rat,0>(claims Pald + change ln ™ provision for claims)/(premiums written, net + change in the provision for unearned premiums)

26 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 IAS ACCOUNTS STATEMENT SPECIAL FEATURES CONCERNING THE ACCOUNTS OF INSURANCE COMPANIES

Result and Capital and Reserves under Finnish and IAS Accounting Practices Premiums Earned valued primarily at acquisition cost or at a lower cording to the instructions of the Ministry of So- Premiums Famed are allocated to the appropriate probable value in the Balance Sheet. Finnish in- cial Affairs and Health, an actuarially calculated FIM '000 1994 ]9?3, Counting periods by changes in the gross Provi- surance companies have the possibility to make target zone is determined between the upper and sion for Unearned Premiums. When the insurance investment revaluations that affect profit. In the lower limits, and the amount of the Equalisation Sampo Non-Life Group, Profit/Loss for the Year under Finnish Accounting Practice 99 945 236566 Period is not a calendar year, premium is synchro- Balance Sheet, revaluations of fixed assets are en- Provision should fall within this zone. The Equali- nised with time, and that part which does not cor- tered in the Revaluation Reserve. Revaluations that sation Provision Ratio used to measure the solvency - Revaluation of Investments _ -17 600 respond to the accounting year at hand is trans- affect profit are re-adjusted up to the acquisition of insurance companies is the ratio between the + Decrease in Investment Revaluations 9 206 29 268 ferred to the Provision for Unearned Premiums. price if the current value of investments increases. real amount of the Equalisation Provision and the The transferred part becomes premiums earned in upper limit of the target zone as a percentage. The + Decrease in Revaluations caused by Change in Group Structure - 148 969 higher the figure, the better the company's + Depreciation on Revaluation of Real Estate held as Investments 5 287 14 634 'he following year. Therefore, Premiums Famed for Technical Underwriting Result and risk-carrying capacity. + Revaluation of Investments not Realised 238 119 218 436 each accounting period are arrived at by deduct- Unequalised Result - Value Re-adjustments on Investments - 50 374 -373 289 ing the change in the Gross Provision for Unearned Technical Underwriting Result is derived by deduct- As Motor Third Party Liability insurance is a + Taxes Transferred to Capital and Reserves 10 000 - Premiums from Premiums Written. ing credit loss on premiums, claims incurred (net statutory insurance, the insurance company should ± Change in the Equalisation Amount - 25 639 -65139 of reinsurance) and operating expenses from make no profit or loss on the risk premium in the earned premiums (net of reinsurance). The result ± Change in Depreciation of Bonds - -24025 Claims Incurred long term. The accumulated profit and/or loss is ± Change in Transition Reserve - 6 500 29696 Claims are divided so that compensation paid or where incidental fluctuation has not been bal- balanced by means of the Motor Insurance Buffer ± Depreciation Adjustments to Investments and Fixed Assets 17 924 68 294 Payable is reconciled with that accounting year anced is termed the Unequalised Result. It is de- Reserve. The change in the Motor Insurance Buffer ± Change in the Voluntary Pension Insurance Liability 1 708 13 269 during which the insured event occurred. Division rived by adding the net investment income, exclud- Reserve enables the premiums earned and claims ing revaluations, to the technical underwriting re- incurred for the accounting year to be set against + Value Re-adjustments on Shares in Associated Companies - 13365 is effected by the change in the Provision for Claims. + Interest on Associated Companies' Profits 21 880 25 439 Compensation payable in the future on the basis sult. When the incidental fluctuation of claims in- each other. In the calculation of key figures, the ± Other Adjustments - 17 602 -2968, of reported and unreported claims occurring dur- curred is eliminated from the Unequalised Result change in the Buffer Reserve is deducted from pre- ing the accounting year is transferred to the Provi- by changing the Equalisation Amount, the out- miums earned. come is the Operating Margin Before Depreciation. Result under IAS Accounting Practice 303 954 314915 sion for Claims, and compensation paid out dur- ing the accounting year on the basis of previous Special Features Concerning Sampo Non-Life Group, Capital and Reserves under Finnish Accounting Practice 3 133 544 2 505 328 Periods' insured events is deducted from the Provi- Technical Provisions and the Finnish Insurance Business sion for Claims. The change in the Equalisation Equalisation Amount Finnish insurance needs are covered by separate, - Revaluation of Investments (in 1988 - 1994) - 386 259 -400 752 Amount included in the Provision for Claims ena- Both the Provision for Unearned Premiums and primarily domestic non-life, life and pension in- + Accumulated Revaluation of Investments not Realised 1 622 929 1 384915 bles the distribution of Claims Incurred during the the Provision for Claims constitute an insurance surance companies. In 1994, there were 52 insur- - Accumulated Value Re-adjustments on Investments -423 596 -373 289 accounting year to correspond to the average company's liabilities to the insured and benefici- ance companies in Finland. More than a half of + Equalisation Amount 1 492 930 1 355 661 long-term claims ratio (cf. the sections on Techni- aries. Together, they are referred to as Technical them are limited liability companies, the rest are + Housing Reserve 20 866 21562 cal Provisions, Equalisation Amount and Un- Provisions. mutual. The largest companies have formed groups + Transition Reserve 29 863 36363 equalised Result). Thus Claims Incurred during the The Technical Provisions are calculated in ac- which can offer all classes of insurance under a + Accumulated Depreciation Adjustments to Investments and Fixed Assets 195 978 166800 accounting year are arrived at by adding to Claims cordance with the calculation formulae confirmed mutual marketing name. The total market share Paid the change in the Provision for Claims. - Voluntary Pension Insurance Liability -2 796 -4 503 by the Ministry of Social Affairs and Health. To bal- of the four biggest insurance groups is over 90 per + Value Re-adjustments on Shares in Associated Companies 466 13365 ance the incidental fluctuation of claims incurred, cent. + Interest in the Capital and Reserves of Associated Companies 324 905 -11825 Reinsurance Ceded an Equalisation Amount is calculated as a part of Even the statutory lines of business such as ± Other Adjustments - 26 392 -10173, Insurance companies retain most risks. However, the Provision for Claims. The Equalisation Amount private sector employment pension insurance, niajor single events are provided for by reinsurance, enables the balancing of the technical underwrit- workers compensation insurance and motor third Capital and Reserves under IAS Accounting Practice 5 982 438 4 683 452 ' e. by transferring a part of the risk to other insur- ing result to correspond to the long-term average party liability insurance, as well as the insurance ers. When Sampo cedes reinsurance, reinsurance claims ratio (= claims incurred to premiums against treatment injury, are managed by private ceded is deducted first from the Premiums Earned, earned). The Equalisation Amount comprises the insurance companies. A statutory pension insur- IAS ACCOUNTING PRINCIPLES - In calculating Depreciation According to Plan, interest payable during construction and Equalisation Provision and the Motor Insurance general rises in construction costs have been included under acquisition costs for land and and secondly, from Claims Incurred on the Profit ance company with its subsidiaries may not be con- - Equalisation Amount and Untaxed Reserves have been regarded as items under Capital buildings. Depreciation on buildings located on real estate held as fixed assets and used by and IXJSS Account when calculating Sampo's result. Buffer Reserve. solidated in the accounts of another insurance and Reserves. Sampo has been re-entered under Result for the Period and Capital and Reserves. Thus, Earned Premiums Net of Reinsurance, An upper and lower limit and target zone are company, or other company. Finnish insurance - Deferred Taxes have been disregarded, on the grounds that it is improbable that such - Undepreciated balance of capitalised cost of non-product-related computer systems has Claims Incurred Net of Reinsurance and Underwrit- calculated for the Equalisation Provision. The lower business is supervised primarily by the Insurance liabilities would be realised within the next three years. Taxes transferred to Capital and been entered under annual expenditure. Reserves have been added to the Result. ing Result are obtained. The amounts due to and limit is the calculated minimum requirement for Department under the Ministry of Social Affairs and - Voluntary Pension Insurance Liability has been treated as a deduction against Capital and from reinsures are shown in the Balance Sheet. securing the interests of the insured. The upper Health, but also by the consumer protection and - Revaluations of investments have been entered as deductions against Result and Capital Reserves. and Reserves. limit is an amount determined by means of math- free competition authorities. - Companies treated as Associated Companies are presented on page 44. ematical calculations, up to which the accumula- - Value adjustments on investments not realised and entered in accordance with Finnish '^vestments accounting practice have been re-entered under Result for the Period and Capital and - Figures relating to non-Finnish Associated Companies have been converted into Finnish I he investments of an insurance company must tion of the Equalisation Provision is justified in Reserves. Value re-adjuslmenLs have been deducted against Result for the Period and markka at the Bank of Finland's average rate on the date of closure of accounts. he profitable, secure and liquid. Investments are order to improve the company's solvency ratio. Ac- Capital and Reserves. - Interest in Associated Companies' Profits and shares in their Capital and Reserves have been calculated by the equity method.

27 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 SUPERVISORY BOARD BOARD OF DIRECTORS AND AUDITORS

Kalevi Numminen (-95) Ahti Hirvonen (-95) Esko Muhonen (-95) Martin Saarikangas (-96) BOARD OF Chairman Jukka Härmälä, 48 B.Sc. (Econ.), Managing Director, Enso-Gutzeit Oy President, CEO Chairman of the Board Managing Director President DIRECTORS Imatran Voima Oy Unitas Ltd Vapo Group Kvaerner Masa-Yards Inc. Chairman Vice Chairman Kari O. Sohlberg, 54 M.B.A., Managing Director, Oy G.W.Sohlberg Ab Henrik Höglund (-97) Pentti Mäki-Hakola (-95) Seppo Sipola (-97) Krister Ahlström (-97) Group President Surveyor Councellor President, CEO President, CEO KWH Group Ltd Asset Management Company Georg Ehrnrooth, 54 M.Sc. (Engnr.), President, Metra Corporation Ahlström Group Berndt Nielsen (-95) Arsenal Ltd Vice Chairman Matti Ilmari (-96) President, CEO President Nielsen Group Björn Sprängare (-95) Ari Heiniö, 49 M.A. (Law), Managing Director, Oy Stockmann Ab Pekka Luhtanen (-95) ABB Oy Group Doctor of Forestry Managing Director Carl G. Nordman (-97) L Fashion Group Jyrki Juusela (-97) Managing Director Timo Summa (-97) Jouko K. Leskinen, 51 M.A. (Law), CEO, Sampo Non-Life Group Vice Chairman Chairman, CEO Oy Aga Ab CEO Outokumpu Oy Tampella Corporation Esa Swanljung (-97) Jorma Ollila (-97) Thor Björn Lundqvist, 53 B.Sc. (Econ.), Managing Director, Rettig Heating Group B.V. President Heimo Karinen (-97) CEO Matti Sundberg (-95) Finnish Confederation of Salaried CEO Nokia Group President Employees (STTK) Kemira Group Valmet Corporation Vesa Vainio, 52 M.A. (Law), CEO, Unitas Ltd Vice Chairman Risto Parjanne (-96) Keijo Ketonen (-97) Mayor Seppo Säynäjäkangas (-96) Kalevi Aro (-95) Managing Director City of Oulu Professor President Oy Hirun Sanomat Polar Electro Oy Aro-Yhtymä Oy Niilo Pellonmaa (-96) Antti Lagerroos (-96) CEO Teppo Taberman (-96) AUDITORS Auditors Jaakko Nyman Authorised Public Accountant, M.B.A. Fredrik Björnberg (-96) President, CEO Veitsiluoto Oy Master of Science in Economics Chairman of the Board Finnlines Ltd Myllykoski Oy Heikki J. Perälä (-96) Christoffer Taxell (-95) Thor Nyroos Authorised Public Accountant, B.Sc. (Econ.) Erkki Lahtinen (-97) Managing Director President, CEO Göran J. Ehrnrooth (-96) Managing Director Tax Payers Association Partek Group Chairman Visuvesi Oy of Finland Fiskars Corporation Pirkko Työläjärvi (-96) Deputy Auditors Pertti Keskinen Authorised Public Accountant, M.B.A. Yrjö M. Lehtonen (-95) Harri Piehl (-96) Governor Robert G. Ehrnrooth (-95) Chairman, CEO CEO Province of Tlirku and Pori President, CEO Santasalo-Jot Ltd Kymmene Corporation Authorised Public Accountants KPMG Wideri Oy Ab Oy Effjohn Ab Pekka Vennamo (-97) Juhani Leppä (-95) Kauko Pihlava (-96) President, CEO Matti Elovaara (-96) Mayor Licentiate in Law PT Finland Ltd President City of Tlirku Tamro Corporation Voitto Ranne (-95) Seppo Lindblom (-97) President Juhani Forss (-96) Chairman, CF.0 The Confederation of Unions for Year of expiry of office given in Managing Director Postipankki Ltd Academic Professionals in Finland brackets. Steveco Oy (AKAVA) Curt Lindbom (-96) Kai Hietarinta (-95) CEO Jarmo Rytilahti (-95) Vice Chairman Oy Hackman Ab President Neste Corporation AskoOy

28 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 PRIVATE SAMPO AND KANSA GENERAL

Working as a single entity, Private Sampo serves households, farms and the 1993. The operating margin (measuring the re- the targeted state of the products, operational proc- Joint product knowledge training will make although numerous overseas companies are now Private Sampo and Kansa self-employed. Of the company's 800 000 clients, sults of Private Sampo's operations) deteriorated esses and information systems. At the beginning of it possible to extend the services intended for Kansa registered in Finland. There is bound to be com- petition in the future concerning insurance prices, General have used their households account for the vast majority - 730 000; year on year. Nevertheless, the company reached 1995, decisions will be taken concerning the phas- General clients to all Sampo offices. During 1994, the self-employed for 26 000; and farms for the re- ing of this project and the information system so- synergetic benefits were also sought in head office new products and the quality of service. Private combined strength in the its operating margin target. maining 28 000. Private Sampo can claim almost A drop in the motor TPL rate for the third suc- lution that will be used. Implementation of this functions. Sampo has placed particular emphasis recently on year under review to com- 10 per cent of the total market, and about 19 per cessive year, together with the 2.5 per cent increase extensive refprm was initiated by a two-year train- increased client satisfaction and cost-effective op- mand nearly 30per cent cent of the private household field. in the number of road accidents during 1994, weak- ing programme covering all managerial levels. Prospects erations. These will also be the principal goals of of the private households The client service concept is built on the ened the profitability of this insurance class. Of par- With the improvement in economic trends and a the new company unit. insurance market. They multichannel service which guarantees availabil- ticular concern was the increase in claims paid for 150 000 Households choose Flexi corresponding fall in unemployment, the purchas- The new Insurance Contracts Act comes into now clearly lead the field. ity and on a network of contact people. Clients may personal injuries. Regional pricing was applied Kansa General has more than 300 000 household ing power of households is now recovering. This force in July, 1995, with the objectives of improv- at any given time choose the service channel that more extensively in motor vehicle insurance to try clients, commanding a six per cent share of the also acts as a boost to car sales. ing the position of policyholders and increasing the Private Sampo pushed up meets their needs. Their personal contact is respon- to achieve price levels in line with the regional in- total market, and about nine per cent of private Furthermore, client potential is expanding obligation of insurance companies to provide cli- its share of both home and sible for the overall client relationships and for its cidence of losses. Claims paid for motor vehicle households. because of the growing numbers of self-employed. ents with information. The combined forces of motor vehicle insurances development. insurance also went up - as did the number of ve- The company's operations focus on improv- On the other hand, the number of fann households Private Sampo and Kansa General have prepared written - in the case of hicle-related thefts. In a determined bid to pre- ing the services it provides for clients belonging to is set to decrease through demographic structural fully for this change by redesigning the client com- home insurances by 430 000 Sampo Agreements vent such crimes, Private Sampo award premium trade unions. Kansa General has a very firm foot- changes. munication system to give more consideration to The non-life insurances of private households the viewpoint of Sampo clients. more than nine per cent. The outstandingly popular Sampo Agreement ena- discounts to clients who take their own independ- ing in the organisational sector covered by the Cen- bles clients to concentrate all the insurance pro- ent security action by using anti-theft systems. tral Organisation of Finnish Trade Unions. Co-op- have not yet been affected by foreign competition, In spite of the changes eration agreements made by the company cover experienced by Kansa some 600 000 union members. Private Sampo Kansa General General, the company's FIM mill. 1994 Change, % Kansa General services are provided at the 1993 FIM mill. 1990 1991 1992 1993 1994* Flexi insurance portfolio Flexi service points in Sampo's offices. The com- Premiums Written remained at almost the Premiums Received 1 025.9 1091.4 -6.0 pany also controls a network of 220 part-time in- 754.0 732.8 698.0 665.5 600.6 surance negotiators working with portable compu- Net Investment Income 87.1 55.4 64.5 88.3 -35.2 same level as that of 1993- Claims Paid 593.7 600.8 -1.2 ters, who form an important distribution channel. Claims Incurred, Net of Reinsurance 175.7 196.3 185.0 161.8 Operating Margin 266.5 327.5 -18.6 163.9 Clients are served through Change in Equalisation Amount -49.0 -45.1 65.9 154.0 6.6 No. of Personnel incl. the Regional Organisation -1.2 Kansa General's best known product is the 936 947 Operating Expenses the joint regional organi- Flexi, which is already preferred by no fewer than -243.9 -248.3 -241.5 -267.9 -202.1 Operating Margin before Depreciation -75.4 sation. This now consists 150 000 households. The Flexi service can be modi- 18.9 3.4 8.0 -15.7 Technical Provisions 1464.0 1 547.7 1810.7 1830.3 1 378.2 of 85 offices. tection they need in a single agreement, thereby Claims paid on home insurances also in- fied to meet the changing insurance needs of pri- Investment Portfolio at Current Values 1047.4 1 357.8 1094.2 1 085.5 1 185.8 gaining generous premium discounts. Practically creased slightly compared with the previous year. vate individuals as well as families. Flexi combines Kansa General's Total on Balance Sheet 1 749.6 1836.6 2 081.3 2 117.2 1 572.6 a third of all valid service agreements in Finland - Property and personal insurance, and is supple- Flexi service is available Losses due to crimes continued to rise, but the Capital and Reserves + Untaxed Reserves 213.2 213.7 214.7 192.1 39.4 430 000 of them - are Sampo Agreements, fully claims paid out for them took a downward turn. mented by motor vehicle and motor TPL Average No. of Personnel 116 86 85 86 391 in 66 offices. supported by Private Sampo's comprehensive cli- There was, though, a positive trend: losses caused insurances. * Part of the Non-Life Group as of April 15,1994 ent service. Clients' staff contacts make certain that by breakages were down on the 1993 figure; on the the insurance protection of Sampo Agreement hold- other hand, damage resulting from leakages in- Technical Underwriting on Target Board of Directors ers is updated through the company's annual revi- creased markedly. The company will pay increas- The review year was exceptional for Kansa Gen- Service Agreements sion service. ing attention to loss prevention by attempting to eral. Uncertainty among its clients undoubtedly Jouko K. Leskinen, CEO, Chairman influence the behaviour of its clients - for exam- resulted from the difficulties experienced by Kansa - 600 000 Hannu Kokkonen, Managing Director, Independent Security Action ple, by encouraging them to protect themselves Life Insurance Company Ltd. and Kansa Pension Vice Chairman In the year under review, premiums received by against crime, and to detect leaks without delay. Insurance Company Ltd., and from the lively pub- 500 000 - - Martti Jalonen Private Sampo fell by six per cent. However, in the Sampo Service Unit started operating at the lic discussion they sparked off. But the incorpora- Mikko Mäenpää principal insurance classes covering home and beginning of 1995. It comprises the Organisational tion of Kansa General into the Sampo Group re- - - - - 400 000 Guy Wires motor vehicles, the total of premiums received went Services, Direct Services and the Sampo Call Cen- gained and reinforced client confidence, and the 300 000 up in comparison with the previous year, although tre, a national telephone service line. The Unit Flexi portfolio remained almost at the level of the - - - - motor TPL insurance premiums were down by over functions on three fronts. It handles relations with previous year. 200 000 19 per cent due to a fall in the rates. But calcu- the extensive client organisation network of Pri- Kansa General's premiums received fell by - - - - lated on the basis of the number of policies, the vate Sampo and Kansa General; it sends out direct 9.8 per cent, mainly because of the drop in the 100 000 - - - - volume of all these classes of insurance saw an in- marketing offers to organisation members; and it motor TPL rate. Excluding credit insurance, claims crease over the 1993 figures - home insurances assists offices with their telephone services during Paid were at the level of the previous year. The tech- n by more than nine per cent. busy periods and after office hours. nical underwriting result was satisfactory, opera- 1990 1991 1992 1993 1994 •B Flexi tional efficiency improved, and operating expenses There was a reduction in claims paid, and During 1994, an extensive development •• Sampo Agreement credit losses fell to less than half of the level set in project was carried out, which involves describing Went down.

29 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 INDUSTRIAL INSURANCE

Industrial Insurance's Industrial Insurance Limited provides services for ance - and in industrial investments where most An unparallelled catalogue of marine losses Industrial Insurance first year in the Sampo large and internationalised companies and their of the largest items were insured by Industrial In- led to a decrese in hull insurance premiums writ- FIM mill. 1990 1991 1992 1993 1994 key personnel. For over a century it has been the surance. ten, an increase in claims paid and, overall, a nega- Group was one of positive Premiums Written 1 203.2 1 333.5 1196.0 1321.4 1 486.8 leading innovator in risk management services tai- In addition to these conspicuous achieve- tive result in this class. development, with im- Turnover 1614.0 1714.3 1 552.9 1872.4 2 031.2 lored to clients' needs. In its own client segment, ments, Industrial Insurance attracted important The year's most devastating marine loss for Net Investment Income 225.8 165.4 32.9 263.7 264.4 provements over 1993 in Industrial Insurance is the indisputable market new clients from the privatised state-owned com- Industrial Insurance was without doubt the Claims Incurred - 1 228.2 - 1 257.1 - 1 283.5 -1286.6 - 1 239.7 leader. the company's operating panies falling for the first time within the sphere grounding of the Sally Albatross. The company's Technical Underwriting Result 9-0 -55.1 -206.2 -156.1 47.0 result, solvency and of private insurance. One of these was the former share of compensations for that disaster was FIM Unequalised Result 82.6 -4.9 -348.6 -6.8 171.3 profitability. Direct Operating Concept Unchanged Post and Telecommunications of Finland - priva- 92 million, of which FIM 5 million was to be car- Change in Equalisation Amount 115.3 10.6 -205.9 -125.7 26.9 insurance and reinsur- Industrial Insurance may be new to the Sampo tised as PT Finland Limited - who demonstrated ried by Industrial Insurance itself after deduction Operating Expenses 118.6 115.1 102.3 114.4 140.2 sufficient confidence in Industrial Insurance to Operating Margin before Depreciation -15.5 -70.0 118.9 ance underwriting Group, but it has a long and honourable history of the reinsurers' share. 0.9 144.3 stretching back 104 years from 1994, its first year select the company as its main insurer. All in all, though, direct insurance as awhole Result before Appropriations and Taxes 33.6 -26.9 -38.6 104.6 141.6 Technical Provisions (through portfolio reor- as a limited liability company. Its reputation and Industrial Insurance's exclusive Global Pro- remained profitable, and despite the small number 2 749.9 3106.1 3382.4 2 086.0 2 695.6 Investment Portfolio at Current Value 304.0 275.0 252.0 250.2 357.8 ganisation) also per- business concept are, and always have been, based gramme, the result of intensive product develop- of extensive exceptions, the trend in non-life in- Capital and Reserves + Untaxed Reserves 2 565.7 2 226.1 2 256.8 2 686.7 3 197.7 formed extremely well. on tried and trusted principles: intimate knowledge ment, was introduced last year. The programme surance losses yielded a positive result. Total on Balance Sheet 3 526.8 3 697.8 4 628.0 3169-3 3 561.9 of its clients and their operations; expertise in the offers companies operating internationally the op- Reinsurance premiums written - amounting Average No. of Personnel insurance and risk management sectors; and the portunity to cover their non-life insurance and risk to FIM 505 million - represented an increase of 12 (Industrial Insurance + Finnish Marine) 428 404 390 381 371 maintenance of close and confidential client rela- management needs on a global basis. per cent on the 1993 figures. In the case of life tionships. These things have not changed despite Although the activities of insurance brokers reinsurance, a change in the entering method was the change in legal form. in the Finnish market increased to some extent, responsible for growth. If this is excluded, premi- In 1990-93, Industrial Mutual. In 1994, Industrial Insurance Company Limited. The essential factors in Industrial Insurance's the business they mediated still represented only ums written fell by 20 per cent to FIM 363 million, success are the highly developed products and in- two per cent or so of the premiums written by In- as a result of portfolio reorganisation. Otherwise, surance systems the company offers, plus the ac- dustrial Insurance. On the other hand, the com- the sector registered a satisfactory outcome. knowledged expertise it has gained in loss preven- pany is actively seeking co-operation with skilled Finnish clients' foreign insurances and tion and flexible claims settlement. It also pro- brokers, reflecting its previous international expe- reinsurance from captives are included in the vides services internationally and in the two offi- rience in this field. reinsurance figures. Their total premiums written cial languages of Finland, Finnish and Swedish. went up by 34 per cent, to FIM 103 million. Claims Industrial Insurance is better equipped inside Operating Successes Paid amounted to FIM 22 million, but the overall Board of Directors Premiums written the Sampo Group to furnish an even higher stand- In 1994 the premiums written by Industrial Insur- result of foreign direct insurance business was more by insurance class ard of service, and more strongly placed to resist ance amounted to FIM 1487 million, no less than than satisfactory. Jouko K. Leskinen, CEO, Chairman the challenge of international competition. Other 13 per cent up on the previous year. Claims paid Industrial Insurance's operating expenses Mikko Kivimäki, Vice Chairman benefits have come with Sampo membership: in (excluding the change in equalisation amount) increased, but its expense ratio remained at the very Jan-Henrik Kulp risk management and investments in particular, were FIM 1 213 million, more than 14 per cent low level of 12.2 per cent. The company's solvency, Björn Mattsson the resources of the Non-Life Group have been com- down on 1993. too, continued to improve, with solvency capital Kurt Nordman bined to develop new instruments for client use. Direct insurance premiums written also went rising from the 1993 level of FIM 1 912 to FIM 2 Timo Poranen up by 13 per cent, to FIM 982 million. However, 202. The equalisation provision ratio representing Better Results and a this improvement could be laid primarily at the solvency was 191. Larger Market Share door of the structural reorganisation and the re- 5 During the review year, Industrial Insurance's to- sulting transfer of large company clients from Prospects tal of direct insurance premiums written increased, Sampo to Industrial Insurance - although premi- These are undoubtedly bright times for Industrial 1. Statutory workers' compensation insurance 22.8 % and the company's market share rose correspond- ums written by Finnish non-life insurance com- Insurance, which has been given a solid base for 2. Motor TPL 3.3% 3. Motor vehicle 3.7% ingly. This was due primarily to Non-Life Group panies in general actually showed a two per cent the future by the favourable development of direct 4. Hull and cargo 12.5% restructuring: the new division of activities decrease last year. insurance and the successful reorganisation of for- 5. Fire and other property insurance 15.9% channeled large companies from Sampo to Indus- By that yardstick, Industrial Insurance still eign reinsurance. And since loss prevention has 6. Other direct insurance 7.8% 7. trial Insurance and small ones from Industrial performed at a better than average level in premi- always played a special role in the company's cli- Domestic reinsurance 2.9% 8. Foreign reinsurance 31.1 % Insurance to Sampo Enterprise. ums written in the fields of liability and personal ent service, Industrial Insurance will continue to The improvement in both market share and insurance in particular, even when those compa- invest in its expertise to handle both traditional and premiums written is also gratifying evidence of the nies ceded to it by Sampo are excluded. In cargo new risks. recovery in the Finnish economy. This was further insurance, the portfolio transfer increased both pre- borne out by the significantly better performance miums written and claims paid, but the profitabil- of Finland's leading export industries - particularly ity of the class remained good. reflected in the results of cargo and business insur-

SAMPO ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 57 t SAMPO ENTERPRISE

The year under review Sampo Enterprise's role in the Sampo Non-Life new insurance products Transport Sampo, Business terprise is a founding shareholder of Finnventure Sampo Enterprise Board of Directors was the first year of Group is as service provider to Finnish industry and Sampo/Entrepreneurs, Real Estate Sampo and the Rahasto II Ky, and has commenced negotiations FIM mill. 1994 commerce, and their key personnel; to the public motor vehicle groups of Business Sampo/Compa- with Teknoventure Oy on a shareholder and Jouko K. läskinen, CEO, Chairman Sampo Enterprise as a Premiums Written 873.1 sector; and to housing and real estate companies. nies. The new customer management system for co-operation contract. Sampo Enterprise is also a Kari Airaksinen, Vice Chairman "Rirnover 1 047.5 separate company in the silent partner in Suomen Riskirahasto I Ky, and, Seppo Hauta-aho Sampo Enterprise lists some 56 000 clients. The the whole Sampo Group was also taken under the Net Investment Income 141.0 Sampo Non-Life Group. Heikki Kyöstilä company is strongest in the public sector, where it Sampa umbrella. together with the Non-Life Group Investments Unit, Claims Incurred -721.3 It was a good year from commands a 40 per cent market share. In the com- In the statutory workers compensation insur- has developed a Corporate Finance business which Technical Underwriting Result - 45.7 Vesa Lammela both the technical point pany insurance field, it serves roughly a quarter of ance transfer business, Sampo Enterprise achieved will target the small and medium-sized enterprise Unequalised Result 95.3 Antti Piippo of view as an insurance the market. At the beginning of 1994, the com- a commendable net transfer result. Transfer busi- sector. Change in Equalisation Amount - 30.7 company and in terms pany created a Broker Relations Unit to run the ness was exceptionally good in the Helsinki area, Sampo Enterprise's operating expenses Operating Expenses -189.9 business mediated by insurance brokers. amounted to FIM 189-9 million. At 22.5 per cent, Operating Margin before Depreciation 64.5 of the operating result. but the company also performed well in its tradi- Sampo Enterprise's operating concept is to tional strongholds of South Western Finland and the direct insurance expense ratio was lower than Result before Appropriations and Taxes 48.7 Technical Provisions 1 259.2 Sampo Enterprise maintain the closest possible relationship between Osthrobotnia. Indeed, all client segments showed expected. Investment Portfolio at Current Values 1 765.0 achieved a degree of clients and the company's highly experienced and a similarly successful transfer result. The company's operating margin before de- Capital and Reserves + Untaxed Reserves 361.2 preciation was FIM 64.5 million, and the result for solvency notable by any motivated staff. There were major investments inrisk man - Total on Balance Sheet 1 763.3 international standard. The company's service network is divided agement services. The quantity of expert services the financial year was FIM 34.2 million - again Average No. of Personnel 518 Direct insurance into nine geographical regions. Each region offers rendered by the company now amounts to almost in line with expectation. Sampo Enterprise's un- clients a complete package of non-life and life in- 3 000 man days. Priority areas were the support equalised result aggregated to FIM 95.3 million - premiums written devel- surance, employment pension insurance and fi- offered to clients in occupational accident, fire, an excellent outcome considering the size of the oped as anticipated, but nancial services. Every client has a personal Sampo crime and liability risk management. Special at- company. the value represented by Enterprise contact, and a support group to assist tention has been paid to training employees of cli- claims paid out was the contact person. ent companies whose operations include work sub- Keen Competition larger than it appeared Sampo Enterprise support services assist the ject to fire hazard. Sampo Enterprise also designed Sampo Enterprise's domestic competitors are in prospect. However, regions by developing services, products and tools, new risk management services for companies op- known to have new development projects in providing expert services, and through its control erating in networks and for those involved in envi- Progress. When these are introduced, competition the operating margin of centralised production tasks. In line with the ronmental risk management. will undoubtedly become keener, particularly in the before depreciation and Group policy of internal activity division, Sampo Sampo Enterprise and its predecessor, the small business market. Furthermore, foreign in- the overall result did Enterprise furnishes its own non-life insurance Business Market Unit, have developed their opera- surance companies are almost certain to step up correspond to expecta- underwriting and claims settlement operations, tions over several years through the in-house per- their activities in Finland. They will probably fo- tion, and profitability and buys the other services it needs from the rest of sonnel training programme, Operating Concept. cus on large and multinational enterprises together was sufficient as judged the Group. with individual insurance classes or client seg- ments. It is anticipated that these companies will by the claims ratio. Living up to Expectation Clients Trust Sampo Enterprise Sampo Enterprise's direct non-life insurance pre- approach potential clients using a pattern of di- Sampo Enterprise clients supplied a striking dem- miums written amounted to FIM 845.2 million, rect and cost-effective service. Competition in cus- onstration of their trust in the company during the and gross premiums written to FIM 873-1 million. tomer relationship control is also expected to es- 1. Statutory workers compensation insurance 40.3% calate because of the increasing brokerage. first quarter of last year. During that period, in line This trend in premiums written conformed fully 2. Motor vehicle insurance 9.6% with the merger portfolio transfer agreement, ex- with expectation. At FIM 10 million, credit loss on Sampo Enterprise's international operations 3. Motor third party liability insurance 8.5% isting insurance contracts passing to the newly-cre- premiums stayed at a much lower level than was aim to ensure the provision of competitive risk 4. tiobility insurance 4.9% 5. Fire and other property insurance 23.3% ated company could be terminated by the client forecast. management, underwriting, and claims settlement 6. Cargo insurance 4.1 % without notice. In fact, Sampo Enterprise's result- Claims incurred in 1994 totalled FIM 721.3 services for clients who have themselves set their 7. Other non-life insurance 6.1 % ant client losses were gratifyingly small. million, including a larger than expected tranche sights on overseas expansion and intemationali- 8. Domestic reinsurance 2.8% 9. Foreign reinsurance In April, 1994, the Group acquired Kansa of direct insurance claims. Those claims paid in sation. In the Nordic and Baltic countries, Sampo 0.4% General leading to around 10 000 new clients and statutory workers compensation insurance and in- Enterprise will either provide these services itself, 19 insurance professionals joining the nine regions surance against treatment injury were also higher or actively guide its affiliated companies. Elsewhere under the service pattern defined by Sampo Enter- than predicted. This, however, was offset by the total in the world, the services will be the responsibility prise's operating concept. paid out on motor vehicle insurance claims, which of affiliated companies. Company policy is to manage clients' insur- was lower than expected. ance solutions using Sampo Enterprise's own prod- Net investment income amounted to FIM 141 ucts and information systems. Last year this in- million, with new investment consisting mainly of volved the continuing development of Sampa - the bonds, debentures and shares. most substantial information systems investment The emphasis in client financing was on ven- of the past few years - and the introduction of the ture or capital investment Unit Trusts. Sampo En-

SAMPO ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 59 / OTSO INSURANCE COMPANY OF FINLAND LTD

Otso Loss of Profits Insur- Otso's domestic clientele reflects the structure of the Expertise in claims handling and minimising port industries. In international business, the vol- The Insurance Company of Finland was another solid performer ance Company Ltd main- Finnish economy. For example, an increasing share losses is, therefore, an important part of Otso's cli- ume of foreign direct insurance grew rapidly dur- for the Sampo Group. The Finnish credit insurance market ing 1994 compared with the previous year; the tained its position as of premiums written for the forestry industry can ent service. demonstrated positive development on a general operational be seen as a firm indicator of industrial export re- Otso also provides a range of technical loss lower volume of reciprocal reinsurance business the leading insurance was compensated by the increase in its rate level. basis during the review year. At the end of 1994, its working covery. On the other hand, the share of Otso's pre- prevention services, such as its Non-Destructive capital showed an increase over the previous year, and stood at company specialising in miums written fell for commerce, services and Testing service. These services are especially valu- Otso's claims ratios remained at an exception- interruption insurance. domestic manufacturing, an equally sure sign that able in optimising maintenance, and in minimis- ally low level, falling below long-term average fig- a level that was no less than eighteen times the minimum Results all round exceeded these sectors are still in recession. ing those losses that still occur despite every pre- ures. The claims ratio in gross underwriting at own capitalisation required of credit insurance companies operating expectations, contributing The foreign direct insurance portfolio contin- caution. account amounted to 58.3 per cent. The total in the European Economic Area. In addition, an equalisation ues to develop favourably. In addition to Finnish The successful provision of loss of profits in- equalisation provision increased by 36.9 per cent provision of FIM 27.8 million further consolidates company to a most satisfactory to FIM 340.9 million at the year-end. accounting year which companies' overseas operations, Otso welcomed surance demands not only a general acquaintance solvency. new clients including foreign companies in the with various fields, but also specific knowledge of Otso's net investment income for 1994 totalled left Otso'sprofitability and timber, metal and energy industries. The recovery the particular features of individual clients. Con- FIM 69.9 million, and its foreign exchange posi- There was, admittedly, a marked decline in premi- solvency in excellent of investments has increased - not only the de- sequently, Otso's modus operandi is based on co- tion was securely in balance. long-term average. Reinsurance underwriting, ums written, but this was mainly caused by the ter- health. Despite transfer- mand for advance loss of profits insurance, but also operation both with clients and property insurers, Magnus Nordling, Otso's Managing Director however, remained in the red,an d even the Insur- mination of the Central Pension Security Institute's that for ordinary fire and machinery loss of profit enabling Otso's experts to manage a variety of risk since 1978, retired on July 31,1994. The company ance Company of Finland's own reinsurers had an ring part of its insurance credit insurance treaty. The treaty - which had insurances. situations and ensure fast recovery from losses. wishes to thank him for his meritorious efforts over unprofitable year. portfolio at the end of many years for the loss of profit insurance busi- been highly unprofitable over the past few years - At the beginning of 1994, responsibility for 1993 in the merger reor- was discontinued at an earlier stage. Loss of Profits Insurance Successful Adaptation to ness, and for Otso. Veli Kalle Tavakka took over as managing the credit direct insurance business of On the other hand, claims incurred by the ganisation, the company's for Client Safety a New Operating Environment the new Managing Director on August 1,1994. the whole Sampo Non-Life Group was concentrated company in 1994 totalled FIM 34.8 million, less gross premiums written in Property loss can disrupt a company's daily opera- The year under review was the first spent by Otso in the Insurance Company of Finland. At the same than half of the FIM 79-3 million registered in the 1994 were at the same tions - or in some cases, bring them to a complete as part of the Sampo Non-Life Group. Despite Otso Operative Result 1994 time, 16 experts whose services were previously previous year. And claims paid amounted to FIM halt. If that happens, loss of profits insurance cov- transferring part of its insurance portfolio to Otso's gross premiums written brought in FIM bought from other Non-Life Group companies be- level as 1993• On top of 18.8 million, against FIM 60.9 million in 1993. ers the company's result. Pohjola when its ownership structure changed at 283.5 million in 1994. The company's unequalised came employees of the Insurance Company of Fin- these favourable domestic For the first time in three years, direct insur- Knowing the full extent of a client's riskena - the end of 1993, the total of the company's direct result was FIM 96.6 million, and its operating mar- land itself. figures, international ance claims ratios stayed considerably below the bles Otso to design appropriate loss of profits cover. insurance premiums written decreased by just gin before depreciation FIM 59-7 million. Otso's direct insurance under- Particular attention is paid to the risks involved in 11,2per cent. However, this decrease was more than profit for the accounting period after taxes totalled writing increased rapidly. modem control systems and logistics. For instance, matched by a 17.3per cent increase in direct insur- FIM 43.7 million. a lack of intermediate storage and greater use of ance written. At FIM 283.5 million, gross premi- Technical provisions amounted to FIM 612.2 Insurance Company of Finland HIM mill. sub-contractors increases a company's dependence ums written stayed at the 1993 level. million, and the balance sheet total to FIM 927.2 1994 1993 1992 1991 1990 on its operating environment. Furthermore, results This unchanged volume of operations re- million. At the end of 1994, the current value of Premiums Written 36.7 53.3 21.4 can be affected by losses incurred by its principal sulted from Otso's successful domestic canvassing Otso's net investment portfolio stood at FIM 1178 49-9 38.9 Turnover 64.5 58.3 63.7 55.9 29.7 clients. and from the continuing recovery of Finnish ex- million. Net Investment Income 23.2 7.0 Otso's gross premiums written and operative 8.5 15.5 5.2 Claims Incurred -34.8 -79.3 -71.6 -24.6 -2.2 result thus exceeded the objectives set for 1994. Loss of profits insurance premiums Technical Underwriting Result 13.4 -4.8 7.3 8.1 5.7 written by client industry 1994 Unequalised Result Otso 28.7 -2.9 11.2 19.4 7.5 Prospects Change in Equalisation Amount FIM mill. 1990 1991 1992 1993 1994 10.0 -7.4 2.3 4.7 3.1 Otso expects to increase the volume of its opera- Operating Expenses -7.9 -5.1 -4.5 -4.1 -3.5 tions and its premiums written in 1995, thanks to Operating Margin before Depreciation Premiums Written 270.5 251.7 246.0 287.2 283.5 18.7 4.5 8.9 14.7 4.3 the improved domestic economic situation (com- Result before Appropriations and Taxes 20.1 4.2 8.7 14.6 4.2 Turnover 370.1 373.8 337.0 500.9 384.9 Technical Provisions 83.3 67.5 59-4 46.8 34.1 Net Investment Income 77.3 100.8 68.2 193.7 69-9 pared to the previous years) and to the develop- Investment Portfolio at Current Values 102.5 109.1 62.7 55.4 58.9 Claims Incurred -199.5 -183.3 -235.8 -213.8 -163.0 ment of the company's own international opera- Capital and Reserves + Untaxed Reserves 94.1 83.6 85.0 87.1 79-7 Technical Underwriting Result -1.1 -38.9 -44.2 -24.8 26.7 tions. Statistically, the amount of claims paid will Total on Balance Sheet 265.1 177.2 159-4 147.0 126.1 Unequalised Result 76.2 61.9 24.1 168.9 96.6 increase, too. Otso's solvency and long experience Change in Equalisation Amount -32.1 -10.1 -17.1 -24.0 -36.9 and expertise in the loss of profits insurance busi- 3 2 Operating Expenses -43.2 -40.8 -39.9 -39.5 -34.3 ness combine to create a solid base for the further Operating Margin before Depreciation 44.1 51.8 7.0 1. Forest 44.3% 144.9 59-7 development of its customer-oriented operating 2. Energy 6.2 % Result before Appropriations and Taxes 41.9 49.8 5.6 143.4 58.4 concept, targeting both present and potential cli- Technical Provisions 3. Food 6.2% 625.7 614.3 649.0 594.5 612.2 ents. 4. Metal 14.2% Investment Portfolio at Current Values 1017.8 940.0 953.7 1149.6 1 177.8 5. Trade and Services 6.8% Total on Balance Sheet 867.2 896.1 885.2 977.4 927.2 6. Chemical 20.8 X Capital and Reserves + Untaxed Reserves 190.3 194.5 177.6 274.8 217.8 7. Others 1.4 % Average No. of Personnel 66 67 67 65 58

SAMPO ANNUAL REPORT 1994 73 32 SAMPO ANNUAL REPORT 1994 I ST INTERNATIONAL AND PATRIA

ST International has been in charge of the run-off cerning Patria has been calculated on the basis of The Sampo run-off ST International: Technical provisions ST International: Foreign reinsurance Patria: Foreign reinsurance operations of Sampo's reinsurance portfolio since the portfolio handled by the company at present. companies succeeded in and capital and reserves, FIM mill. claims paid, FIM mill. claims paid, FIM mill. reducing technical 199L when Sampo decided to cease writing new A substantial part of the run-off companies' business. The merger between Sampo and Indus- investments are held in the form of foreign cur- 1400 provisions and trial Mutual brought ST International's operations rency bonds and debentures. The reduction of 1200 decreasing the number closer to those of Patria, the reinsurance company Patria's domestic stock portfolio enabled the com- of active reinsurance that handles Industrial Mutual's existing reinsu- pany to enter more than FIM 80 million of real- 1000 rance portfolio. Sampo's London subsidiary, Lake- ised gains on investments under investment in- treaties - their major 800 strategy objective for the wood, which is also involved in run-off operations, come. Both companies aim at keeping their cur- year under review. is closely involved with both Finnish run-off com- rency position in balance by making sure that in- panies. vestments are in the same currencies as the tech- _ 400 Beyond that, the nical provisions. In this way, exchange rate fluc- emphatic strengthening Successful Operations tuations do not affect the company's result. Ex- _ 200 of the Finnish markka Both ST International and Patria are working change rate differences in investments are entered 1990 1991 1992 1993 1994 during 1994 makes strenuously to terminate the remaining treaties, under investment income, whereas those in tech- 1990 1991 1992 1993 1994 1990 1991 1992 1993 1994 M Passive contracts* mm Passive contracts* either through commutation (i.e., by paying the nical provisions appear under underwriting. The •• Technical provisions, gross comparison with M Active contracts* mm Active contracts* outcome was that the two run-off companies B Technical provisions, net cedent the outstanding treaty claims in advance) •Dec. 31, 1994 'Dec. 31,1994 the 1993figures ^ Capital and reserves or by justifiably stating that the treaty can be ter- showed a health currency position, and both man- problematic. minated. One essential requirement is a sure aged to avoid any meaningful exchange rate losses. knowledge of the treaty portfolio. The initial stance Furthermore, it was only those exchange rate losses ST International Patria 1994 FIM mill. 1994 of the run-off companies is that compensation can that made the net investment incomes for both FIM mill. 1990 1991 1992 1993 1993"' only be paid if the claim presented by the adver- companies negative. Premiums Written 243.3 223.1 22.3 3.2 -1.3 Premiums Written -4.1 -27.4 sary is justified. This can be a somewhat grey area, Turnover 353.5 390.3 230.0 187.9 38.2 Turnover 18.6 75.3 and with some treaties liability has been denied, Risks remain in Net Investment Income 44.8 142.3 199.0 161.4 -63.5 Net Investment Income 22.7 -2.4 leading to a deadlock in negotiations and subse- the Operating Environment Claims Incurred 491.1 864.4 671.0 414.2 3.2 Claims Incurred 64.0 26.9 quent legal proceedings. Although existing liabilities have been successfully Technical Underwriting Result -79-8 -273-9 -272.5 -255.8 40.5 Technical Underwriting Result -23.7 7.5 However, both companies succeeded in dis- run off, the operations even now contain signifi- Unequalised Result -40.0 -150.6 -121.5 -112.0 -23.0 Unequalised Result -2.5 -22.4 continuing a large number of treaties, and so re- cant risks that cannot be ignored. For instance, leg- Change in Equalisation Amount 0.0 0.0 0.0 0.0 0.0 Change in Equalisation Amount 12.8 -27.5 duced their technical provisions. At ST Internatio- islation on compensating environmental liability Operating Expenses 14.5 15.5 14.0 14.2 10.7 Operating Expenses 2.0 10.6 -131.6 Operating Margin before nal, the number of active treaties was cut by about claims has not yet been reformed in the United Operating Margin before Depreciation -35.0 -73.5 -94.4 -23.0 -35.7 -131.8 -94.6 -88.6 -23.6 Depreciation - 15.4 5.1 850 over the twelve-month period, and the total States. This compensation still constitutes the great- Result before Appropriations and Taxes 986.3 1177.6 1 273-9 1185.7 961.9 Result before Appropriations stood at just over 2 800 on December 31,1994. Pat- est threat to the world's insurance companies. Technical Provisions Investment Portfolio at Current Values 826.3 892.9 919.7 853.1 748.0 and Taxes -14.1 5.7 ria was still dealing with around 4 000 active trea- Despite the fact that both Sampo run-off com- Capital and Reserves + Untaxed Reserves 400.7 268.0 172.9 84.2 60.7 Technical Provisions 1316.9 961.4 ties at the turn of the year, but that represented a panies have withdrawn from the major risk areas Total on Balance Sheet 1 495.2 1664.6 1 707.7 1551.5 1 300.7 Investment Portfolio at fall of around 950 compared with the previous year. stemming directly from the USA, this risk is still Average No of Personnel 45' 37 38 39 31 Current Values 1053.0 755.0 In the course of the review year, ST Interna- inherent in the treaty portfolio coming through Capital and Reserves + tional paid out FIM 64 million, and Patria FIM113 London. Untaxed Reserves 92.1 92.1 million as compensation for commuted treaties. The increase in global catastrophes at the end ST International: Investments at balance Patria: Investments at balance Total on Balance Sheet 1818.9 1 321.5 The effect of exchange rate fluctuations on the of the 1980s and beginning of the present decade sheet values on Dec. 31,1994, FIM mill. sheet values on Dec. 31,1994, FIM mill. Average No of Personnel 0 20 change in technical provisions can be seen in the has clearly slowed down. However, a new coverable figures contained in the final accounts. But if these event has emerged: compensation paid to the fami- The 1993 figures are not comparable. The insurance portfolio was transferred to fluctuation effects are taken out, then ST Interna- lies of the victims of the Pan Am airliner explosion the company on August 31,1993. tional's technical provisions fell by FIM 55 million, over Ixxkerbie, in Scotland, in 1988. A court ruled and those of Patria by 159 million. that the Warsaw Convention does not apply in this There was also a favourable trend in claims case, so legal proceedings will be instituted in the paid. The graphs on the next page illustrate this USA regarding the amount of compensation to be trend for the foreign business of both companies paid. This is bound to be reflected to some extent over the past five years. For the sake of clarity, the in the future compensation bill for ST Interna- relevant exchange rate is the one prevailing on tional. It is some consolation that more recent 1. Bonds and debentures 309.1 1. Bonds and debentures 381.3 December 31,1994, with the treaties divided into major disasters, such as the earthquake in Kobe, 2. Current assets 342.0 2. Current Assets 257.0 3. land and Buildings, Real Estate Shares 5.8 those which had been terminated, and those still Japan, will no longer involve these two companies 3. Land and Buildings, Real Estate Shares 11.0 4. Shares 90.4 4. Shares 114.4 current, on that date. Pre-1994 information con- in compensation liability.

SAMPO ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 / SAMPO GROUP COMPOSITION OF THE SAMPO GROUP

Sampo Group Affiliated Companies Associated Companies

The Sampo Non-Life Group companies base their The Sampo Non-Life Group's affiliated companies Of the aforementioned affiliated companies, Nova, The Sampo Group: Principal Cross-Shareholdings on Jan. 1, 1995 specialisation on client segments. Together with the are Pension Varma Mutual Insurance Company Hansa Industrial and Hansa Kindlustus are also Kaleva Mutual Insurance Company and Insurance and Nova Life Insurance Company Ltd, which ca- associated with the Non-Life Group. Vastuu Company Sampo Pension Ltd, they fonn the Sampo ter mainly for statutory pension and voluntary life Reinsurance Company is an associated company Group. insurance services for the clients of Industrial In- engaged in underwriting. Associated companies 100% SAMPO ENTERPRISE The range of Kaleva Mutual Insurance Com- surance. whose operations are related to insurance and in- pany's services comprises voluntary life and pen- In the Non-Life Group's international opera- vestments include Autovahinkokeskus Oy, Sampo 10% sion insurances for both private households and tions, the most important affiliates areTrygg-Hansa Finance Oy, Finnish Loss Survey Ltd, Vahinko- 100% INDUSTRIAL INSURANCE companies. In a mutual company, the policyhold- and the companies owned jointly with it: Hansa palvelu Oy, and Kansalliset Liikekiinteistöt Oy. The 100% ers are shareholders of the company. Kaleva's guar- Industrial N.V. of Holland and the Home Insurance shareholdings in these, as well as in the associated antee capital is owned by the Sampo Group com- Company, which operates in the business insurance companies operating in other fields, are presented 47% SAMPO PATRIA panies. market in the United States. Ilansa Kindlustus of in the Appendices, on page 44. Insurance Company Sampo Pension Ltd pro- Estonia started operations in Latvia in 1994. 3.8 % 100% vides services related to statutory pension insurance and pension funds. TEVA-RE 5.1 %

100% KANSA GENERAL Composition of the Sampo Group

80% INSURANCE CO OF FINLAND LTD

SAMPO j 10% 10% INDUSTRIAL INSURANCE KALEVA 90% OTSO SAMPO ENTERPRISE SAMPO PENSION KANSA GENERAL OTSO 100% —• ST INTERNATIONAL INSURANCE CO OF FINLAND ST INTERNATIONAL • 36.8% PATRIA 63.2 % SAMPO HOLDINGS (UK)

r 100 % NON-LIFE GROUP LAKEWOOD SAMPO GROUP

61.6% VASTUU Affiliated companies of the Sampo Group:

1.3% • Trygg-Hansa • Hansa Industrial • Home • Hansa Kindlustus • Pension-Varma • Nova 50% SAMPO FINANCE

30% 20% 50% 38.4 % KALEVA

f 30% interest in share capital, Non-Life Group companies interest in share capital, affiliated and associated companies SAMPO PENSION interest in guarantee capital, affiliated companies * shareholding of the sub-group Sampo Holdings (UK)

35 SAMPO ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 73 I KALEVA

Kaleva Mutual Insurance Most of the company's 266 000 clients are private ing instruments. Stock Exchange quotations ex- Continuing Demand for Kaleva Life Group Company ended its 120tb persons, but the private households segment also perienced a downward trend towards the end of the More Life Insurance FIM mill. 1994 1993 Change, % year of operations on a contains members of official and employee organi- year, and price development was irregular. Future prospects for the voluntary life and pension sations who receive group life and accident Turnover 1 185.1 826.0 note of success. The total insurance businesses are undoubtedly bright - even 43.5 insurances at special rates. Rapid Growth though, matched against European standards gen- Premiums Written 763.6 421.9 81.0 of the company's Kaleva continues to lead the group insurance Premiums written by Kaleva during 1994 totalled erally, there is still a low level of demand in Fin- Net Investment Income 293.8 277.0 6.1 premiums written rose by field serving organisations with a clear majority more than FIM 760 million - an increase over the land for life insurances, and, particularly, for sav- Operating Expenses 130.7 100.5 30.0 more than 80per cent- market share of more than 50 per cent, and the previous year of 80 per cent - plus in the private ing through insurance. Expense Ratio (%) 17.1 23.8 - an achievement reaching company radically improved its position from 20 individual and company segments. Thanks to this The Finns prefer to an exceptional degree to Technical Provisions 4 013.9 3470.7 15.7 far beyond the average in per cent to 25 per cent in the private household life accelerated growth, Kaleva's market share shot up put their money in the bank. However, in the near Total on Balance Sheet 4 455.0 3871.9 15.1 and pension insurance field. In addition, Kaleva 192 201 the field. At the close of by five per cent to 25 per cent. future part of these bank deposits are expected to No. of Personnel -4.5 continues to be responsible for a steady 25 per cent The review year registered a keen demand for be transferred to other forms of investment. At that the year, Kaleva com- of the market in companies' individual insurances. Kaleva's single premium investment insurances, point, insurance saving in its different guises will manded a quarter of the Life insurance requirements of the Sampo with premiums written amounting to FIM 300 surely be viewed as a notable and promising alter- private household life Group's largest company clients are met primarily million. There was a heavy call, too, for the com- native. and pension insurance by Nova Life Insurance Company, a Sampo Group pany's voluntary pension insurances. Life insurances will be the coming priority affiliate specialising in collective additional insur- The value of surrenders went down by no less area for the Sampo Group. Sampo seeks to offer market. Premiums written, FIM mill. Life insurance ance schemes. than 40 per cent to FIM 94 million. The total of The problems of its clients, who now number well over a million, a market shares 1994, % Kaleva's main distribution is handled by the actual claims paid remained at the level of the two meaningful and profitable way to complement 800 6 some insurance compa- regional organisations of Private Sampo and previous years, and the risk business claims ratio their social security benefits with the products of nies have given rise to Sampo Enterprise. Their services are complemented was satisfactory. the Group's life insurance company, Kaleva. The public debate- yet client by Kaleva's own specialist regional organisation. Kaleva's net investment income - mostly in Group also intends to meet the challenge of do- interest and confidence Official and employee organisations consti- the form of interest - amounted to over FIM 280 mestic and international competition with the in- in Kaleva have never tute an important sales channel for group life million. Realised gains on investments stood at troduction of unit-linked life insurance in the wavered. Company re- insurances. There is also a special sales team at FIM 89 million. In investment charges, value ad- Spring of 1995. Kaleva's head office catering for particularly de- justments on investments totalled FIM 62 million. sults were excellent, with manding investment insurance clients. The com- Client or index credits granted on insurance sav- a competitive interest pany expects in the near future to expand the prac- ings averaged three per cent, and stood at FIM 92 1. Kaleva 25.0% tice it began last year of co-operating with insur- million. All Optimi insurances received a total in- obtainable on insurance 2. Nova 5.6 % savings, and Kaleva's ance brokers. Other complementary sales channels terest of eight per cent, including the calculated 3. Stella 13.9% 1990 1991 1992 1993 1994 are also being actively developed. interest of 4.5 percent. 4. Tapiola 14.8% solvency and the struc- Componies 5. Suomi-Salama 33.7% Kaleva's operating expenses rose by 30 per Households ture of its investment 6. Others 7.0 % Steady Rise in Life Insurance cent to FIM 130 million, entirely owing to the com- portfolio are fully in The Finnish voluntary life and pension insurance pany's intensified marketing efforts and greatly in- accord with the new business showed a remarkable upsurge during the creased sales. However, its expense ratio - equat- European Union year under review. Premiums written amounted ing operating expenses with premiums written - Surrenders, FIM mill. Investments portfolio Solvency by EU criteria, requirements. to FIM 3.7 billion, an increase of fully 35 percent decreased from 23.8 per cent in 1993 to 17.1 per on Dec. 31,1994, FIM mill. FIM mill. over the previous year. The competitiveness of cent last year. In the review year, there was no rise at current values FIM 4 289 mill. • 200 400 in the number of personnel employed by Kaleva in investment-like savings insurances also underwent 180 1 a welcome improvement, with premiums written actual insurance business. 160 in 1994 exceeding FIM 1 billion. Proof of Kaleva's first-rate solvency is the fact 140 The media gave wide coverage to the bank- that its working capital of FIM 389 million, calcu- 120 ruptcy of two small Finnish life insurance compa- lated according to the new EU criteria, is almost 100 nies. These events had no significant bearing 011 twice the minimum amount required by those cri- the general level of business. Instead they served to teria. The cornerstone of the company's future sol- 80 emphasise that demand for insurance was indeed vency is its investment portfolio without cumula- _äj 60 concentrated 011 those companies considered by tion of risks, where strong emphasis is placed on I everyone to be financially sound. long-term interest-bearing instruments. —• 20 1. Money market investments 403 One of the obvious effects of the interest rate 2. fond and buildings 1 166 ll 3. Shares 745 1990 1991 1992 1993 199I4 increase was to deter investment in interest-bear- 4. Credits 384 B Companies 5. Bonds and debentures 1591 B Households Working capital: the company's current assets - current liabilities

36 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 SAMPO PENSION

The review year was, in The company brought its operations into line with Good Operating Results was FIM 3 464 million, 5.3 per cent higher than Sampo Pension Group all respects, a successful the requirements of European integration during Sampo Pension's operations in the year under re- the previous year. FIM mill. 1994 1993 Change, % one for Sampo Pension. the year under review. EU and EEA agreements view yielded success on all fronts. Its investment stipulate that operations involving employment result was satisfactory and improved in relative Market Share Up in 1995 Turnover 5 217 5 514 -5.4 A first-class result on pension insurance are separated from other insur- terms on the previous year's, even though net in- Sampo Pension clients are served both directly and Premiums Written 3 755 3 647 2.9 investments enabled the ance functions. Employment pension insurance come fell from FIM 1 671 million to FIM 1 330 through companies specialising in various insur- Net Investment Income 1364 1715 -20.5 company to transfer can be provided only by legally separate compa- million. That decrease was due to a drastic fall in ance sectors. Within the Group network, Sampo Pensions Paid to Beneficiaries 3 464 3289 5.3 FIM 90 million to the nies which, in addition, must limit their activities the general level of interest, which in turn led to a Pension's special area is statutory employment and Operating Expenses 129 133 -3.0 supplementary insurance solely to coverage of statutory employment pension reduction by 6.5 per cent in calculated interest cred- self-employed persons' employment pension insur- Technical Provisions 21 511 19997 7.5 fund. From there it is insurance. ited to the pension fund, representing a drop of two ance for small and medium-sized companies. Cer- Total on Balance Sheet 22 166 20 363 8.8 percentage points over the average level of 1993- tain client contacts are also handled directly No. of Personnel 254 310 -18.1 distributed to clients as Bearing this in mind, Sampo Pension discon- tinued writing optional supplementary pension Sampo Pension's solid performance owed through its own marketing operations and by its bonuses. Sampo Pension's insurance on July 1,1994, and transferred its port- much to its excellent result on investments. After expert staff. market share is growing folio to Nova Life Insurance Company Limited at maximum depreciations, it was able to increase its A natural consequence of Finland's exception- strongly, thanks to the end of the year. Undoubtedly, the separation credit loss reserve by FIM 66 million, and to trans- ally high unemployment rate was a drop of more Premiums written and net investment Pension insurance companies' income, FIM mill. market shares * 1994 successful insurance requirement, laid down by EU law, will in time en- fer FIM 90 million to the supplementary insurance than 4 per cent during 1994 in the number of in- hance the real independence of pension compa- fund, for distribution as client bonuses. The com- sured persons. On the other hand, considerably transfers. 4000 nies. pany's overall investment strategy included well- more employees and self-employed people trans- Within the Sampo timed investments in bonds and debentures, con- ferred to Sampo Pension than those who broke with Group, Sampo Pension Statutory Joint Liability tributing a great deal to the result. the company. These transfers were responsible for

represents particular For the first time in its history, joint liability must The changed composition of the investment the 18 per cent rise in the number of insured at the expertise. This relates now be applied to the employment pension system. portfolio is due, above all, to the almost complete beginning of the year - and thus for the pro- specifically to statutory If a pensions institution goes bankrupt, and its cessation of demand for premium bond and in- nounced growth in Sampo Pension's market share. employment and funds are insufficient to cover its pension liabili- vestment loans. The company's loan portfolio was Excellent underwriting results arose from success- ties, other pensions institutions are required to as- reduced by about FIM 1800 million during 199^- ful co-operation between the companies of the 3 self-employed persons' sume joint liability for the pensions affected. A Its technical underwriting result was also positive, Sampo Group. The growth of the insurance port- 1. Sampo Pension 19.7% 2. Pension-Varmo 28.6% employment pension striking example of this kind of situation occurred folio demonstrates the confidence that both new and its equalisation provision increased by FIM 67 3. Topiolo Pension 13.3% insurance for small and after the bankruptcy of Kansa Pension Insurance million. and former clients have in the way the company is 4. Verdandi 3.3% medium-sized companies. Company Limited. It soon became clear that the handling employment pensions. 5. Pensions-Alandia 0.3 % present decentralised system managed by private TEL and YEL premiums written 6. Ilmarinen 34.8 % Total Premiums Written almost Sampo Pension's operating expenses went Net investment income pension institutions would not be able to handle Unchanged down by 3.0 per cent to FIM 129.2 million. The * Comprises statutory TEL and YEL pension this vital sector of Finnish social security without Sampo Pension's total premiums written grew by company currently employs 250 staff. schemes. Projection. obligatory joint liability. three per cent, amounting to FIM 3 755 million, Current discussions on the pensions system and ending the year at practically the same level also reflect the difficult economic situation in Fin- as 1993- With fewer lay-offs and redundancies, the land. Fears of a "pensions time bomb" continue total paid to the insured in wages and salaries went Pensions paid to beneficiaries, Investments portfolio 1994 Technical Provisions, to be raised, in spite of the many changes that have up, along with the amount of the premiums writ- FIM mill. at current values FIM mill. reduced pension expenditure and postponed retire- ten. Employees paid three per cent of earnings in 3000 14000 ment. employment pension contribution, while the aver- age for employers was 15.6 per cent, including a 12000 On the basis of a report by the committee on - 2500 social expenditure, labour market parties are al- 0.4 per cent fee to cover the expenses of the credit _ 10000 ready preparing changes that would result in sav- insurance operations of the Central Pension Secu- _ 2000 ings on pension expenditure. There is, for exam- rity Institute. Client company bankruptcies caused _ 8000 ple, a plan to determine pensionable earnings on credit losses on premiums to rise to FIM 94 mil- - 1500 6000 the basis of the last ten years of employment rather lion, compared with FIM 72 million in 1993. - 1000 than (as at present) the final four years. Another The level of self-employed persons' YEL pre- 4000 discussion point is the possibility of restricting the miums rose from 18.2 per cent of earnings to 19-4 1. Bonds and debentures 30 % I 500 2000 so-called "future period" which allows a pension per cent. However, the increase in premiums writ- 2. Land and buildings 11 % entitlement in cases of disability. Also under con- 3. Shares 6 % 0 ten was actually very slight, as both YEL earnings 4. Investment loans 15% 1990 1991 1992 1993 1994 1990 1991 1992 1993 1994 sideration are the grounds on which the pension and the number of insured fell. 5. Premium bond loans 38 % •• Provision for unearned premiums index (concerning the long-term development of H TEL In 1994 the company paid employment pen- •• YEL •• Provision for claims pension expenditure) is determined. sions to 104 885 people. The amount involved

71 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47 MANAGEMENT OF THE SAMPO GROUP

Matti Rantanen Risto Kausto Jouko K. läskinen, CEO Hannu Kokkonen Carl-Olaf Homén Juhani Vesterinen Martti Porkka Kari Ola Eero Holma Matti Ruohonen Veli-Kalle Tavakka Antti Savolainen Managing Director Managing Director Managing Director Managing Director Managing Director Managing Director Managing Director General Manager General Manager General Manager Managing Director Managing Director Insurance Co of Finland Kaleva Sampo Pension Sampo Insurance Co l.td Private Sampo Industrial Insurance Sampo Enterprise Investments Group Finance International Operations Run-Off Companies Otso

Private Sampo Industrial Insurance Sampo Non-Life Group Personnel Administration

Hannu Kokkonen, Managing Director * Carl-Olaf Honie'n, Managing Director * Jouko K. Leskinen, Chief Executive Officer, Managing Director * Jorma Norkela Pertti Näyskä, Chief Actuary Martti Pesonen, Actuary Juhani Kangas, Group Planning Pekka Hyytiäinen, Development Kristian Ignatius, Finance and Administration Ilmo Korpelainen, tegal Affairs Esa Ketola, Marketing Reijo Kämäräinen, Client Service Pertti Nurvala, Information Office Services Juhani Kontkanen, Service Production Jorma Erikäinen, Planning Kari Ola, Group Finance * Seppo Siltanen, Sampo Service Juhani Laaksonen, Companies Riitta-Liisa Ami, Investor Relations Raimo Uusikartano Yngve Nygårdas, International Companies Regional Managers Yrjö Somersalmi, Marketing Juha Anttila, Eastern Finland International Operations Information Technology Lars Gammelgård, Northern Finland Pekka Heikkilä, Southern Finland Seppo Juutilainen, Underwriting and Claims Eero Holma * Eija Holmström, Systems Martti Huhtala, South Western Finland Klaus Berg, Private and Motor Hull Hans von Hertzen, Reinsurance Assumed Pekka Meras, SamNet Kari Kantalainen, Central Finland Göran Cedercreutz, Shipowners Lais von Hertzen, Oy Finnish Captive & Risk Services Ltd Harri Paani, Information Management The region was incorporated into the regions of South Western Finland Harri Ek, Cargo Anders Nordman, Reinsurance Ceded and Eastern Finland on April 4,1995. Esbjörn af Hällström, Liability Antti Perttu, International Direct Insurance Kaleva The South Western Region was renamed Western Finland. Nils Rönnholm, Accident and Associated Companies Seppo Viljakainen, Property Matti Rantanen, Managing Director Kansa General Terttu Virmavirta, Life Insurance Risk Management Tapani Hiominen, Chief Actuary Markku Paakkanen, Managing Director Otso Paula Salonen, Production Antti Törrönen, Actuary Juha Ettala Veli Kalle Tavakka, Managing Director Pirkko Welin, Actuary Sampo Pension Sampo Enterprise Peter Granqvist, International Operations and Reinsurance Investments Pentti Järvikare, Administration Risto Kausto, Managing Director Juhani Vesterinen, Managing Director * Risto Kajastila, Planning Martti Porkka * Rauno Tienhaara Simo Sarvamaa, Actuary Ilkka Henriksson, Real Estate Lasse Heiniö, Chief Actuary Timo Laitinen, Development Sirpa Mannila, Securities Seppo Alhonsuo, Accounts Management Risto Lindström, Risk Management Run-off Companies Kari Vihurila, Credits Ilkka Kohonen, Planning Kaarlo Paatero, Broker Relations Jorma Kuokkanen, Investments Tero Toponen, Underwriting and Claims Matti Ruohonen, Managing Director * Pertti Laesvuori, International Group Benefits Markku Tursas, Marketing Veikko Loukola, Production Financial Administration Sakari Pekkarinen, Marketing Regional Managers Jukka Vainio, Claims Insurance Company of Finland Jukka Mäkinen Matti Heikkinen, Central Finland Mauri Asumaa, Shareholders' Secreteriat Leo Kelho, Northern Finland Antti Savolainen, Managing Director Timo Lehtinen, Southern Finland Hannu Reivonen, South Western Finland * belong to the Sampo Non-Life Group Board of Management Tero Rintala, Ostrobothnia Seppo Räty, Greater Helsinki Tapio Santala, Western Finland Hannu Tarnanen, Eastern Finland Hannu Tarvonen, South Eastern Finland

72 SAMPO ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 73 I KEY INFORMATION ON THE SAMPO GROUP OFFICES OF THE SAMPO GROUP

FIM mill. 1990 1991 1992 1993 1994 Head Office functions Other Offices Subsidiaries, Associated Companies and Offices Outside Finland in Finland Subsidiaries Branch Office in England Turnover Sampo Enterprise Nummela Gota House Sampo Non-Life Group 3321 3472 3116 5 508 5 570 Private Sampo Alajärvi Närpiö Sampo Kindlustuse AS 70-74 Cannon Street Kaleva Life Group 872 850 Yliopistonkatu 27, tbrku Espoo Oulu 1190 826 1 185 Narva mnt. 24 London EC4N 6AE Sampo Pension Group Postal address: P.O. Box 216, - Tapiola Paimio 5 080 5370 4826 5 514 5 217 EE-0010 Tallinn United Kingdom FIN-20101 TLirku Forssa Parainen Estonia Telephone: + 44 71 248 3705 Telephone: + 358 21 2663311 Hamina Pieksämäki Premiums Written Telephone: + 372 2 612 440 Telefax: + 44 71 236 7417 Telex: 62242 sampo fi Harjavalta Pietarsaari Sampo Non-Life Group 2 578 2 657 2 314 Telefax: + 358 21 2665811 Telefax: +372 6410070 3695 3 986 Heinola Pori The Home Insurance Kaleva Life Group Kari Aitolehti, Managing Director 565 553 812 422 764 Helsinki Porvoo Company Aleksanterinkatu 11, Helsinki Sampo Pension Group 3775 3913 3271 3 647 3 755 -Aleksi Raahe Head Office Postal address: P.O. Box 347, - Hakaniemi Raisio 59 Maiden Lane, N.Y. FIN-00101 Helsinki Associated Companies Net Investment Income - Itäkeskus Rauma NY 10038 Telephone: + 3580 13221 Hansa Kindlustus - Kannelmäki Riihimäki USA Sampo Non-Life Group 497 346 571 1182 740 Telex: 62242 sampo fi Narva mnt. 24 - Malmi Rovaniemi Telephone: + 1 212 530 7000 Kaleva Life Group 259 267 240 277 294 Telefax: + 3580 132 2940 EE-0010 Tallinn - Mannerheimintie Saarijärvi Telefax: + 1 212 530 3004 Sampo Pension Group 1142 1416 Estonia 1379 1715 1364 Salo Vahinkovakuutusosakeyhtiö - Sörnäinen Telephone:+ 372 2 612 444 Savonlinna Kansa Huittinen + 372 2 425977 Claims Incurred Seinäjoki Offices Itälahdenkatu 21, Helsinki Hyvinkää Telefax: + 372 3312 161 Sampo Non-Life Group 2 461 2 709 2 575 3611 3 223 Postal address: P.O. Box 1110, Hämeenlinna Somero Sampo Kaleva Life Group 254 308 635 465 340 FIN-00101 Helsinki Iisalmi Suonenjoki Hansa Kindlustus Insurance Company Ltd Tammisaari Sampo Pension Group 3944 3826 3400 3604 3985 Telephone:+ 358 0 13 292 Ikaalinen 15 Kaiku Str. London Representative Office Telefax: + 3580 132 9300 Imatra Tampere LV-1050 Riga Gota House Toijala Operating Expenses Joensuu Latvia 70-74 Cannon Street Industrial Insurance Jurva Tomio Telephone: + 371 2 224 149 London EC4N 6AE Sampo Non-Life Group 605 596 543 669 884 Insurance Company Jyväskylä Tlirku Telefax: + 371 8 821006 United Kingdom Kaleva Life Group 124 131 116 100 131 of Finland Jämsä - Yliopistonkatu Telephone:+44 71 248 3705 Sampo Pension Group 123 129 138 133 129 Vattuniemenkuja 8 A, Helsinki Järvenpää - Hämeenkatu Hansa Industrial Telefax: +44712367417 Postal address: P.O. Box 12, Kajaani Uusikaupunki Insurance N.V. Tapani Mäkelä, Representative Operating Margin Before Depreciation FIN-00211 Helsinki Kangasala Vaasa Telephone:+ 3580 69611 Valkeakoski Sampo Group Sampo Non-Life Group 114 -164 48 510 370 Kankaanpää Head Office Telex: 124832 assur fi Kauhajoki Vammala K.P. van der Mandelelaan 90 Nevskij Prospekt 57 Kaleva Life Group 36 -12 -1 20 37 Telefax: + 358 0 6961 2232 Kemi Vantaa 3062 MB Rotterdam (Nevskij Palace Hotel) Sampo Pension Group 1 48 6 180 132 Kemijärvi - Tikkurila The Netherlands 191025 St. Petersburg Otso Kerava - Myyrmäki Telephone: + 31 10452 7299 Russia Capital and Reserves and Untaxed Reserves Bulevardi 10, Helsinki Keuruu Varkaus Telefax: + 31 10 452 4403 Telephone:+ 7 812 3U 3109 Postal address: P.O. Box 126, Risto Siltanen, Representative Sampo Non-Life Group 2 270 1938 1984 2 699 3 346 Kokemäki Virrat FIN-00121 Helsinki Kaleva Life Group 128 122 170 Kokkola Ylivieska Branch Office in Holland 173 186 Telephone: + 358 0 68071 Sampo Pension Group Kotka Ähtäri K.P. van der Mandelelaan 90 223 212 155 278 370 Telex: 121061 otso fi Kouvola Äänekoski 3062 MB Rotterdam Telefax: + 358 0607656 Kuopio The Netherlands Total on Balance Sheet Telephone: + 31 10 212 1000 Kuusamo Service points:

Sampo Non-Life Group o Kaleva w 7996 v o 8 690 14858 16 234 Lahti Telefax: + 31 10 212 0850 Kluuvikatu 3, Helsinki - Hanko Kaleva Life Group 2 625 3286 3703 3872 4 455 Postal address: P.O. Box 347, Laitila - Mäntsälä Branch Office in Germany Sampo Pension Group 15 274 17713 18 577 20 388 22 166 FIN-00101 Helsinki Lappeenranta - Orivesi Rennbahnstrasse 72 Telephone: + 358 0 13221 Lapua - Viitasaari 60528 Frankfurt a.M. Average No. of Personnel Telex: 62242 sampo fi Lieksa Deutschland Sampo Non-Life Group 2365 2 351 2 225 2 642 2 966 Telefax: + 3580 132 2785 Lohja Telephone: + 49 69 967 8050 Kaleva Life Group 200 221 217 201 192 Loimaa Telefax: +49 69 670 1441 Sampo Pension Sampo Pension Group 294 304 302 310 254 Loviisa Lapinlahdenkatu 1 b, Helsinki Mikkeli Postal address: P.O. Box 290, Mänttä FIN-00181 Helsinki Nokia Telephone: + 3580 13221 Telex: 62242 sampo fi Telefax: + 3580 132 2942

39 SAMI'O ANNUAL REPORT 1994 SAMPO ANNUAL REPORT 1994 47